Home ownership and culture

Homeowners in the United States are watching prices continue to go down. At the same time, the percentage of Americans owning homes is also falling; it has dropped to 66 percent nationwide. Both these conditions have been evident since the real estate bubble burst in 2008.

One of the factors driving down home prices is the difficulty of obtaining financing; after the collapse, the rules were tightened and financing became more difficult to obtain. Financing is an obvious driver in the housing market, shrinking the pool of qualified buyers. Some analysts and Realtors, it seems, are expecting home prices to reach a bottom sometime after 2012, as the supply of qualified buyers, home supply, and home prices reaches equilibrium.

Financing is only one driver in the housing equation, however. Aside from the supply of homes not yet on the market from the wave of foreclosures, there is an underlying culture shift which doesn't seem to be recognized and may depress home sales for separate reasons.

In the traditional home market, it is assumed that families will want to buy homes in which to raise children and to build equity and stability for the family. Such an assumption may not hold true for an ever increasing segment of the population. Many Americans now live in "non-traditional" families, and many people are committed to the single lifestyle rather than a familial style. No small number of people have chosen to forego the commitment of marriage; avoiding a 30-year mortgage commitment might seem preferable to them as well. Furthermore, many of these people will either never qualify to buy a home, or will choose to rent even if they could buy. In other words, the pool of buyers shrinks. Single moms, for example, who might desire the larger space of a home, are traditionally the poorest population group, making it difficult to qualify as a buyer. For many people, renting assures that someone else is responsible for time and money consuming maintenance and repair work. In modern America, rental of home furnishings is big business, and it's probably a sign of the times.

As people become increasingly accustomed to renting furnishings and cars, the short-term commitment of housing rental may be their preferred option. Of course, the counter argument is that everyone needs housing, so those homeowners who choose to sell will be able to find rental agencies to buy those homes. If true, that will serve to depress housing prices further, since a small pool of large business entities seldom have to bargain entirely "at arms length" with individual sellers.

The upshot of this is not that "the sky is falling," because a home is still more than an investment; families do need a place to live. On the other hand, this does suggest that the housing market may continue in a downward trend, and not just for 2012.