Stacie Hartman

The Mortgage Blog of Stacie Hartman

Negative Equity And The Homeownership Gap

The rate of homeownership has fallen from its 2006 peak of 69 percent to 67.2 percent at the end of last year. But the official rate is calculated by the Census Bureau and includes negative equity homeowners, or those that owe more than their homes are worth. According to a recent staff report from the Federal Reserve Bank of New York, when negative equity homeowners are excluded from the official calculations because they’re likely to become renters over time, the resulting rate is closer to 62 percent, 5.6 percent below the official rate. This homeownership gap is wider in cities that experienced severe price declines in the past few years. Las Vegas, for example, has a gap of more than 40 percent. To support the homeownership rate, the report suggests policies that encourage principal write downs would be more effective than concentrating on helping borrowers manage their monthly mortgage payment. More here and here.

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