‘Real’ Homeownership Rate Falls to Lowest Level in 50 Years

Forget the Census Bureau. The “real” homeownership rate has fallen to its lowest level in almost 50 years.

As defined by the folks at the John Burns Real Estate Consulting firm in Irvine, Calif., the real ownership rate is the percentage of households which own a home and are not 90 days or more delinquent on their mortgage. The Census Bureau counts owners who are tardy on their loans, no matter how late they are.

So, whereas Uncle Sam says the ownership rate is at 65.5%, it is “greatly” over-stating the figure because most of the 3.8 million households which are three or more months behind are not likely to keep their homes. This category of mortgagors, says Sean Fergus of the Burns consulting agency, “are really just renters in waiting.”

That means the real homeownership rate is really at 62.1%.

Historically, Fergus points out, the spread between the published rate and the real one is slightly below 1 percentage point because even in the strongest economic environment, some people fall behind on their house payments. But now the spread is 3.4 points.

Meanwhile, not only is the ownership rate dropping, but so is outstanding mortgage debt. U.S. consumers owed $8.995 trillion on their residential loans at the end of March—the lowest debt figure recorded in almost five years, according to new figures compiled by National Mortgage News and the Quarterly Data Report.

NMN will update that number this week.