If the economy remains sluggish and credit conditions remain tight, the homeownership rate could fall another one to two percentage points, according to a study funded by the Mortgage Bankers Association.
Given high unemployment and that 25% of homeowners are underwater, "we think it is plausible that homeownerships could fall one to two percentage points over the next few years," the study says. MBA's Research Institute for Housing America supported the study.
"These declines are likely to be greatest in cities and regions in which house prices were the most volatile in the last decade," said Syracuse University Professor Stuart Rosenthal.
The homeownership rate has already fallen 2.8 percentage points from 2004 to 66.4% in the first quarter of 2011.
If the homeownership rate declines one to two percentage points, it means one million to two million more owners will lose their homes over the next few years.
The study "Homeownership Boom and Bust 2000 to 2009: Where Will the Homeownership Rate Go from Here?" is co-authored by Professor Stuart Gabriel of UCLA's Anderson School.
The study points out that the biggest swing in homeownership rates during the last decade occurred among buyers 25 to 35 years old. The two professors attribute this to looser underwriting and more risk taking.
"Evidence suggests that households headed by people in their 20s and 30s were willing to take more risk with respect to homeownership in the boom years, followed by a return to a more conservative approach after the crash," Gabriel said.
Foreclosure data are not tracked by age group, however, Census Bureau data show that the homeownership rate for individuals under 35 years old fell to 37.9% in the first quarter of this year, down five percentage points from the third quarter of 2006.
And the homeownership rate for this age group could fall further, according to MBA vice president for research Michael Fratantoni.
"Even though we are back to fairly robust household formation, those young households are more likely to choose to be renters at this point," he said.
