With millions of homeowners now facing foreclosure, the housing crash could see U.S. home ownership falling to under 62 percent comparable to 2001, says a real estate industry expert-John Burns, president of John Burns Real Estate Consulting Inc. of Irvine.
He says his figures show eight million homeowners are currently not paying their mortgage. “We believe six million of them will lose their home to the bank in the next two years,” says Mr. Burns.
When that happens, home ownership will fall to 61.7 percent, he says.
“Another 5 percent of all households — which roughly equals 5 million additional homeowners — have no equity in their home. This suggests only 57 percent of U.S. households own a home with equity value,” says Mr. Burns. “If you believe that many will strategically default, this will push homeownership even lower.”
The Great Recession has done one thing that might be seen as positive, according to the Burns figures. Approximately 58 percent of homeowners now can afford the median priced home compared to 45 percent historically, he calculates.
“The loan modifications have little prayer of helping, primarily because so many of these consumers have too much additional debt,” says Mr. Burns. “As an example, the homeowners who have received permanent modification pay more than 30 percent of their income to service debt that is not their mortgage.”
