NMHC’s 2008 Annual Report, The End of the Ownership Society, examines the current national housing situation as well the housing policies that led to it.
2008 will long be remembered as the year that the easy credit days of the first half of the decade came to a crashing halt. The looming credit crisis quickly expanded into a global financial crisis and eventually into one of the worst economic downturns in decades. It may also be the year that the “ownership society” was officially discredited.
In 2008, homeownership rates posted their sharpest decline in 20 years, falling from a peak of 69.1 percent in 2005 to 67.5 percent in 2008, a level last seen in 2001 and erasing all of the much-touted homeownership gains of the last administration’s “ownership society” initiative.
Meanwhile the number of renter households jumped from 30.9 percent to 32.2 percent. Harvard’s Joint Center for Housing Studies had predicted an increase of 1.8 million renters between 2005 and 2015. Instead, they saw a surge of 1.5 million renters from 2005 to 2007 alone.
As the housing crisis worsened, policymakers came to the same conclusion as consumers. They had to admit—as NMHC had been warning for years—that, yes, there is such a thing as too much homeownership.
Leaders on both sides of the aisle began to acknowledge that by recklessly pursuing “homeownership at any cost,” they greenlighted the housing bubble. Lawmakers and scholars issued calls for a new approach to housing policy, a recognition that renting is a better alternative for many households and renewed energy on the rental housing sector.
Our 2008 annual report also reviews the economic outlook for the apartment sector and the impact of the credit crisis on the industry. The implosion in the for-sale market was initially good for the apartment industry, but the recession it triggered has led to mounting job losses and challenging operating conditions for apartment firms.
Even though it is the only residential sector not overbuilt, like so many other industries, rental housing has become a collateral victim to the single-family housing bubble.
Fortunately, the bright spot in this dark picture is the fact that the long-term health of the apartment industry is strong. Owning a house is no longer viewed as a “can’t lose” investment, and demographics are on our side as the echo boomers enter prime renting age.
In addition, the nation’s new attention to sustainability and climate change will make apartments more desirable since they are, by definition, greener and use infrastructure more efficiently.
Download the full report