Despite housing affordability hitting an all-time high earlier in 2012, the overall U.S. homeownership rate declined during the course of the year.
According to a recent survey conducted by Gallup, the homeownership rate fell to just 62 percent of all Americans. While this is still a majority, it is a notable decline from 2011 when the rate averaged 68 percent.
As the relationship between mortgage rates, property values and median household incomes continues to make home buying affordable, the survey found that 70 percent of Americans think now is a good time to purchase homes. However, they claim that a lack of available credit and negative effects on their personal finances in the wake of the housing market collapse continues to hold them back from making the transition from renter status.
Meanwhile, the sentiment of current homeowners about the direction of the housing market has improved so far in 2012, the survey found. Specifically, 33 percent of households anticipate the value of the homes in their area to appreciate by the end of the year. While this is still a small share of overall sentiment, it's a significant improvement from 2011 when only 28 percent of homeowners felt the same way.
In contrast, only 53 percent of owners feel their homes are worth more today than they were when originally purchased. Even though this is a majority, it is a notable decline from 2008 when 80 percent of homeowners felt the same way, and 2006 – at the peak of the housing market – when 92 percent felt their home had increased in value.
Foreclosures weigh heavily on property values
Fewer homeowners feeling that their homes have gone up in value, could be the result of the high rate of foreclosure seen throughout the country since the recession. According to a recent report from RealtyTrac, foreclosures remained elevated during the first three months of 2012, as the rate increased in 114 of the 212 metropolitan areas monitored by the foreclosure data company. However, rates were slightly lower on an annual basis.
"First quarter metro foreclosure trends were a mixed bag," said RealtyTrac CEO Brandon Moore. "While the majority of metro areas continued to show foreclosure activity down from a year ago, more than half reported increasing foreclosure activity from the previous quarter – an early sign that long-dormant foreclosures are coming out of hibernation in many local markets."
