America Is Becoming a Nation of Renters

The title was the headline of an article this week at msn.com. There are a lot of numbers flying around about homeownership and renting in the U.S.

• The share of all American privately owned houses that stood empty fell in the fourth quarter of 2011 to its lowest level since 2006. This was because the number of houses occupied by renters rose faster than the pace of new vacancies created when homeowners move out.

• The number of housing units occupied by renters rose by 749,000 units in the last quarter of 2011 compared to a year earlier.

• From the fourth quarter of 2010 through the same period in 2011, there was a drop of 91,000 homes occupied by owners.

• At the end of the third quarter of last year, 12.6 percent of homeowners with mortgages were either delinquent or in default; that’s 6 million owners.

• According to the Mortgage Bankers Association, roughly 22% of residential mortgaged properties are underwater, with the owners owing more than their home is worth.

The foreclosure filing pace is increasing while the homeownership rate continues to fall, now just 66% of U.S. homes are occupied by owners. That’s the lowest level of home ownership since 1998. There is a corresponding steadily rising demand for rental units, as the new households being created are not buying, preferring to rent until markets stabilize.

Of course, one reason for fewer buyers is the tightened lending environment. Lenders are requiring much higher down payments, and credit standards are tougher. One recent survey indicated that as many as a third of all would-be buyers are not able to qualify for a mortgage in the current lending climate.

Another reason for fewer vacancies even with rising foreclosures is planning by the lenders who are taking back homes. They are trying to pace the rate of foreclosures put on the market to keep prices from falling more. Also, they save money when a homeowner stays in the home longer due to lower costs of maintenance and security. So, lenders are slowing their foreclosure process in many cases in order to bring homes to the market on a schedule.