The Ownership Society

One of Bush’s central themes — when he wasn’t talking about the War on Tara — was the “ownership society”. As we all know, it was a pretty universal failure. NCLB didn’t get parents any closer to owning control over their childrens’ education. Medicare Part D gave the government more control over Seniors’ prescription drugs; while HSA’s and HDHP’s never really caught on — and now may be destroyed completely by Obamacare. And we all know where his other privatization, which I affectionately call Social Security Part D ended up – with Democrats controlling both houses of Congress.

But for most of his presidency, Bush could point to one shining acheivement: record homeownership levels! But today, with so many people underwater on their loans, one wonders whether you can still call it “ownership”:

The U.S. homeownership rate, already down two percentage points from its 2006 peak of 69%, could fall by another five percentage points over the coming years to levels last seen in the mid-1990s, says a staff report from the Federal Reserve Bank of New York.

The study looks at the number of homeowners who are underwater, owing more than their homes are worth, and excludes them from the official homeownership rate calculated every quarter by the Census Bureau.

While the official figure stood at 67.2% at the end of last year, the authors produce their own estimate of an “effective” homeownership rate. The difference between the official and effective homeownership rates, or what the authors dub the “homeownership gap,” is around 5.6 percentage points for the nation as a whole, which means the effective rate of homeownership is closer to 62%.

I guess it’s not that big of a surprise. Buyers faked their incomes (or never documented them at all), and now they’re “fake” owners.

And the bad news is, if prices keep dropping (as I predict), it’s only gonna get worse.

Hat Tip: Irvine Housing Blog