11/21/2016

Where Is The Lowest Homeownership Rate in the Nation?

According to the U.S. Census Bureau, the lowest homeownership rate in the nation is right here in Southern California:  Los Angeles and Orange Counties.  In the second quarter of 2016, this region had 46.5% of residents living in a home they owned.  That's down from 49% and 48% from prior quarters.

According to First Tuesday Journal, the peak rate of 60.7% was reached in 2006, and the current 46.5% is well below California's historical average of about 55% homeownership rate--although bear in mind the low point was at 43.4% in 1940.  Today's California home prices have exceeded average incomes, and even though mortgage rates are still historically low at today's 4%, future rise in mortgage rates will help that rate continue to languish.

Mortgage rates which have operated in cyclical fashion according to the Fed's decisions about the national economy, plus the lingering effects of past bankruptcies and foreclosures on displaced homeowners, and the return of California's employment levels all have an effect on housing in this state.  An ongoing debate remains about whether young adults of the "millennial" generation are motivated to become homeowners, or not.  

One misperception among many hopeful buyers is that a 20% down payment must be obtained in order to buy -- that's false -- along with a lack of knowledge about financing options in general; another issue for many younger adults is the lack of savings combined with a higher rate of personal spending which prevents some from saving enough for a low-down-payment loan, such as a 3.5% FHA loan, and necessary closing costs.  Keeping credit scores in good shape, and understanding debt effects (i.e., keep debt on credit cards low, low, low), may do a lot to help offset impacts from necessary debt. 

For more information on facts of buying, please contact me!

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