The homeownership rate in the U.S. fell in the first quarter of 2012 to 65.4% (see chart below), according to data released today by the Census Bureau. That was the lowest homeownership rate in 16 years, since the 65.1% rate in the first quarter of 1996, and it looks like it will probably continue falling in the future.
Conclusion: The political obsession with homeownership starting in the mid-1990s raised the homeownership rate from below 64% in 1994 to an artificial level above 69% by 2004, but failed in the long run to create a homeownership rate that was sustainable in the long run. In the process, government policy turned good renters into bad homeowners, created a housing bubble, waves of foreclosures, and a subsequent housing meltdown and financial crisis. In other words, the chart illustrates how government policies (monetary, mortgage market, GSEs, CRA, affordable housing, etc.) created an unsustainable “homeownership bubble” that continues to deflate.