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Homeownership levels dwindle despite buyer's market conditions05/01/2012
Even though closing costs and mortgage rates have reached levels that are ideal for home buying, a new poll suggests that a considerable number of Americans don't own a home.
The survey, conducted by Gallup, found that just over 60 percent of Americans say they currently own a home. That marks the lowest rate of homeownership in more than 10 years, as in 2001, the homeownership rate was 67 percent.
More recently, homeownership had reached 68 percent, up from 65 percent in 2010. Since 2007, however, the rate has been at or below 70 percent in each successive year.
Despite the rate of homeownership declining, Americans nevertheless say they still consider it to be a good time to buy. Gallup found that affordable home prices and mortgages were the main reasons why 70 percent of respondents said now is "good time" to buy a house. Home buying sentiment has been fairly consistent since 2009, the year in which the percentage of people believing it was a good time to buy jumped to 71 percent from 53 percent.
A possible reason for why homeownership levels have fallen off may have something to do with it being more difficult to secure a loan due to tighter lending standards, Gallup noted.
"Potential home buyers can take advantage of today's low mortgage interest rates only if they can meet significantly more stringent down payment and underwriting standards than was the case prior to the financial crisis," the study indicated.
The polling company also suggested that it may have something to do with the sputtering economy, which many financial experts say has improved, but not at a quick enough pace.
Meanwhile, another aspect of the poll that's shown an improvement in sentiment - yet hasn't translated into more home purchases - is consumers' expectation that house prices will go up. Gallup found that more Americans believe local house prices are more likely to increase rather than decrease, as 33 percent indicated as such in this year's poll compared to 30 percent in 2011. That's far from where it once stood, however, as expectations for home prices trending northward was 70 percent in 2005, which many view as the height of the housing bubble.