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Short Sales, Foreclosures Keep Homeownership at Record Low

The rate of homeownership in the U.S. remained at 66.9% at the end of the third quarter, the lowest it has been in the past ten years, mostly due to banks resuming foreclosures on borrowers unable to benefit from mortgage workout programs.

According to a U.S. Census Bureau report this week, the rate was unchanged from the second quarter and is the lowest homeownership rate since 1999. Homeowner vacancies, or the ratio of unoccupied properties up for sale, also stayed still at 2.5%.

Vacancies reached 18.8 million last quarter, down slightly from 18.9 a year ago, the Census report also revealed. Of these, 3.6 million are being sold or in foreclosure; the rest are second properties or vacation homes that are only occupied for part of the year.

From July to September, lenders repossessed a total of 288,345 homes, 22% more than the same period last year, according to reports from California real estate data tracker RealtyTrac Inc.

Many foreclosed homes have been on the market for months, as there is little demand for them due to the weak economy, according to financial economist Brian Bethune of IHS Financial Insight, an economic analysis firm based in Massachusetts.

Homeownership last peaked in 2004, when they reached 69.2% during the second and fourth quarters. The sub-prime mortgage boom resulted in millions of Americans buying homes on cheap adjustable-rate mortgages, only to default during the economic crash.

The Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives (HAFA), the government’s main foreclosure prevention efforts, have prevented millions of foreclosures since their respective launches. Loan modification in particular has kept about 1.4 million borrowers in their homes since March 2009.