Since 2004, homeownership has been on the decline. Efforts to get more Americans to buy a home led to a peak in ownership of more than 69 percent in the second of quarter of ’04. Bill Clinton’s “National Homeownership Strategy” and George W. Bush’s continued support led to the peak, but their efforts are also a reason why banks allowed the often-pilloried bad mortgages that caused the economic recession in 2008.
In my 25 years as a businessman and investment manager, the shrinking from 69 percent ownership to 63.5 percent is one of the largest market corrections, I’ve witnessed. However, less homeowners means there are more renters, a phenomenon that Gene Epstein describes in this article for Barrons.
Diversifying assets (not all high risk, not all in one place) remains a critical piece in solidifying any financial foundation. Banks and the federal government are now determined not to let a housing crisis sink the economy again.
For more information, I invite you to read Gene’s article, located above.