Chart of the Day: Home Ownership Rate Still Falling

Considering that more than 725,000 Americans experienced some form of foreclosure action in the first quarter, you probably won't be surprised to hear that the U.S. home ownership rate continued to decline. It fell to 66.4% last quarter, according to the Census Bureau. That's only a slight decline from 66.5% in the fourth quarter of 2010, but it represents the sixth straight quarter the percentage has either declined or remained flat. The housing market reset continues.

Here's the chart providing some history:

Please note that this chart does not start at zero. It's magnified so you can better see the movement over the past 40+ years. At 66.4%, the home ownership rate now matches the level in the fourth quarter of 1998. Remember all that progress that appeared to be made in broadening home ownership in the past decade? It's gone.

If you believe in such a thing as a "natural level" of home ownership, then this chart appears to indicate that the rate still has farther to fall. Historically, home ownership was between 63% and 66%, hovering around 64% during most of the 1980s and early 1990s. Going on real-world observation, some further decline seems likely. After all, foreclosures continue to occur at relatively high rates.

Some Americans who lost their home after the bubble popped may one day be home owners again. But blemished credit histories will make this difficult for some years. It's unlikely, however, that we'll again see home ownership rates surge past 67% like they did in 2000. Housing finance policy reform seeks to provide less taxpayer support for the housing market and tighter regulations for lenders. Those changes translate into more expensive housing and stricter credit standards. We're going back to a world where not just anybody can obtain a mortgage.