Housing slide worst since Depression

WASHINGTON -- The American dream of homeownership has felt its biggest drop since the Great Depression, according to new 2010 census figures released yesterday.

The analysis by the Census Bureau found the ownership rate fell to 65.1 percent last year. While that remains the second highest decennial rate, analysts say the United States might never return to its mid-decade peak in which nearly 70 percent of occupied households were owned by their residents.

The reason: a longer-term economic reality of tighter credit, prolonged job losses and reduced government involvement.

Unemployed young adults are least likely to own, delaying first-time home purchases to live with Mom and Dad. Middle-aged adults 35-64, mostly homeowners who were hit with mortgage foreclosures or bankruptcy after the housing bust in 2006, are at their lowest levels of ownership in decades.

Measured by race, the homeownership gap between whites and blacks is now at its widest since 1960, wiping out more than 40 years of gains.

"The changes now taking place are mind-boggling: The housing market has completely crashed . . . " said Patrick Newport, economist with IHS Global Insight. "While 10 years ago owning a home was the American dream; I'm not sure a lot of people still think that way."

He noted the now-diminished roles of mortgage buyers Fannie Mae and Freddie Mac, which for decades at the urging of government helped enable loans to borrowers with poor credit, many of them minorities. In a shift, the Obama administration said earlier this year it would move away from a longtime government focus on promoting homeownership for all and instead steer people with low incomes toward renting, where appropriate.

Congress has been considering whether to eliminate the federal tax deduction for home-mortgage interest, a popular incentive to home-buying that's been in place since the early 20th century.

Nationwide, the homeownership rate fell to 65.1 percent, or 76 million occupied housing units that were owned by their residents, from 66.2 percent in 2000. That is the largest drop-off since 1940, when homeownership plummeted 4.2 percentage points during the Great Depression to a low of 43.6 percent.

Blacks, who as a whole have lower income and higher unemployment, were particularly set back by the housing bust. Their ownership rate fell from 46.3 percent in 2000 to 44.3 percent; among whites, the rate dipped slightly from 72.4 percent to 72.2 percent.

Hispanic homeownership increased from 45.7 percent to 47.3 percent.