The burst of the housing bubble is hurting tenants as more people decide not to buy homes. In 2004, before the Great Recession, the percentage of Americans who were homeowners was 69 percent. Now according to the New York Times, the percentage of homeowners has declined to 66 percent. Some experts expect homeownership to decline to 63 percent, the same level as in the 1960s. On May 31, the April index of pending home sales was released by the National Association of Realtors. The decrease of 11 percent was greater than anyone had expected.
Some of the market’s weakness might be feeding on itself. Although interest rates and housing prices are down, buyers are uneasy about purchasing a home. One reason is that the down payment is no longer only one or two percent. A typical down payment is 10% of the purchase price. That means for a San Francisco starter house of $600,000, a typical buyer needs to be able to write a check for $60,000. Most people in their 20’s and 30’s do not have that amount saved.
Just as people are not buying, so new homes are not being built. According to the New York Times, construction of multiunit building is up 21 percent compared with 2010, while single family -homes are down 22 percent. New home sales are down to the lowest level since the data was first kept in 1963.