Business Digest: Homeownership rate expected to drop

REAL ESTATE

Study: Homeownership rate likely to drop

The rate of homeownership in the United States may fall in coming years as households rebuild equity wiped out by the worst slump since the Great Depression, according to a study by economists at the Federal Reserve Bank of New York.

Andrew Haughwout, Richard Peach and Joseph Tracy wrote in a paper posted on the bank's Web site that owners whose mortgages are larger than the properties are worth "very likely will convert officially to renters," assuming prices don't climb in the next several years, they said.

U.S. homes have lost about $5.9 trillion in value since the market's peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to Zillow.com.

The homeownership rate peaked at 69 percent in 2006 and has since dropped to 67.3 percent, a level not seen since 2000, according to the study.

A drop in homeownership would have broader implications for the economy, boosting the national savings rate, the economists wrote.

-- Bloomberg News

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-- From news services