The rate of homeownership is expected to continue its tumble despite a widely recognized thought that home prices will reach their bottom point by next year, according to Zillow.
The firm's report, "June 2012 Zillow Home Price Expectations Survey," asked industry experts about their feelings of the industry, and showed that home prices should only drop 0.4 percent in 2012. Many experts think that the home price drop is on its way out due to the closing of home inventory declines.
Even with the market improving for home prices, the homeownership rate has declined, many experts think it will decline further, which may mean more tenants for property management companies. The report explained that 56 percent percent of economists think that the homeownership rate will drop to less than 65.4 percent by 2017. Another 20 percent think this will fall to less than 63 percent. The lowest level on record was in 1965, which was the lowest level since the statistic was tracked.
"It's good to start to see some convergence of expectations among economists, as it lends further support to the claim that a bottom is real," said Stan Humphries, chief economist of Zillow. "However, the fact that more than half of respondents believe that the homeownership rate will fall lower should be a sobering reminder that significant challenges remain ahead for the housing market, from negative equity to millions of foreclosed homeowners who now have impaired credit, making a return to homeownership harder than it would be otherwise."
Economists who were the most positive about the home price situation in 2012 think it will improve by approximately 1 percent this year, the report said. Those who were the most negative about the situation said the figure should decline by another 2 percent, on average. Despite this, a majority of economists think the figure will improve as the year goes on, despite a rough start.
The report added that home price improvement projections are much more muted now than they were two years ago. In June 2010, the average home price expectation from 2012 to 2014 was 10.3 percent. This is now at approximately 3.5 percent.
Continued struggles in the residential housing market may encourage more consumers to opt for an apartment instead of looking for a property to purchase.