The Real Estate Bloggers

Posted: 09 Oct 2011 08:18 AM PDT

House-on-fire This can not be good news for the real estate world.

But as long as home prices continue to fall and labor markets remain weak, economists say the low rates won’t be enough to lure buyers and spur a rebound in the housing market anytime soon.

“People’s perceptions of likely future home prices have been altered in a negative fashion,” said Thomas Lawler, an independent housing economist in Leesburg, Va. “People buy a home not just to live in but because it’s an investment. Combine that with a lousy economy and it becomes a lot harder in today’s world to qualify for a mortgage to buy a home than to qualify to rent one for the next year.”

Between 2000 and 2010, the ownership rate, defined as the percentage of owner-occupied housing units to all occupied housing units, declined by 1.1 percentage points to 65.1%, with declines in every region. While the rate remains at the second-highest level since data collection began in 1890, it is expected to continue falling as more Americans choose to rent homes instead of own. via the WSJ

When families opt out of real estate home ownership the system tends to fall apart for the real estate industry. Sure an investor will buy the home, but only at the price that makes solid economic sense. A homeowner will pay more for certain instrinsic value that they will give to the home.

Better schools, near family, great neighbors, that amazing kitchen; these are all factors that can cause someone to overpay for a home.

And the opposite is true. Bad neighbors, outgrowing the home, and families moving are all reasons the house will need to be sold.

Either way there is volatility in the marketplace.That is good for the real estate business as it creates transactions.

But if the homes are owned by investors these are blips on the screen. A tenant moves and there are no commissions created.

This is why the real estate community has to create an environment where home ownership is sought after. Letting the American Dream die will have a ripple effect in our industry that will be very hard to recover from.

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Home Ownership Losing It’s Appeal?