Homeownership rate peaked in 2005

Question: Before the housing crash and all the foreclosures, wasn’t the government trying to increase the rate of homeownership in America?

What’s happened to the rate of homeownership since things took a downturn in 2006?

— John McCorkle, Anaheim, Calif.

Answer: Yes, the rate of homeownership topped off in 2005 at 69 percent of American households, with the remainder renting — aside from some small part in institutional housing, e.g., jails.

Homeownership had been absolutely flat from 1985 to 1995 at about 64 percent.

Then, from 1995 to 2005, it shot up to 69 percent. Since 2005, the rate of homeownership has fallen again.

The Census Bureau recently reported that it sank to 66.9 percent in the second quarter of 2010.

Administrations for Presidents Bill Clinton and George W. Bush made a point of increasing homeownership.

Much has been written about the government pressure put on Fannie Mae and Freddie Mac to put more Americans in their own homes during this period.

The 20-City Composite Case-Shiller Housing Price Index shows the same large “bump” for housing values from 2000 to 2008. But housing lagged the homeownership rate, hitting a peak later. When the decline began, housing prices dropped sooner than the homeownership rate.

Right now, the homeownership rate may slip a ways still, while prices seem to be rising slightly.

Overall, there seems to have been a lack of coordination in government, as if the right hand didn’t know what the left hand was doing.

Some — usually conservatives — say that government intervention got us into this mess.

I rather see the mess as caused by a lack of coordination. Deregulation of our financial institutions was the overall trend for 16 years, until President Barack Obama inherited our economic problems.

It looks like trying to increase the homeownership rate without a coordinated, regulated plan was the problem.

Several Western nations, including the United Kingdom, have higher rates of homeownership than the United States.