After cresting near 70 percent at the height of the housing boom, the homeownership rate sunk to a 15-year low during the first quarter of 2012 according to new figures released this week, another reminder that despite a recent spate of encouraging housing data, the country's real estate crisis is far from over.
The U.S. homeownership rate slipped to around 65.4 percent, according to the Census Bureau, after holding steady above 66 percent for the past three quarters. The last time the rate was this low, Bill Clinton was serving his second term as president and James Cameron's Titanic had just hit the silver screen.
Meanwhile, rental vacancy rates plummeted to a near-decade low, further underscoring the shifting dynamics of the housing market.
Americans in the 35- to 44-year-old age group fared with worst, with their homeownership rate dropping almost 9 percentage points to just over 61 percent. Only those 65 and older showed any signs of stability in homeownership rates throughout the market downturn.
Household formation, a leading indicator for housing demand and homeownership, is expected to increase, but experts say that won't necessarily translate into more home purchases immediately, especially when it comes to the younger generations.
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"The statistics bode well," says Jim Gillespie, CEO of Coldwell Banker Real Estate, referring to figures from the Census Bureau that project more than a million new households to be created over the next year. "Young people that were moving in with their parents and grandparents last year are starting to set up households."
"That doesn't mean they're all going to go out and buy houses," Gillespie adds, noting that vast majority will probably opt to rent. "But if they're feeling that way, current renters might say 'I'm going to get a starter home' and once that happens," the chain reaction starts to fall into place, he says. People currently in starter homes might then look to upgrade to another house, and hopefully the housing market can return to a healthier buying and selling cycle.
This year's housing market has been rife with mixed messages for homeowners and would-be buyers. On one hand, January and February saw some of the best sales in five years and recent figures tracking contract signingsâ€"another leading indicator for home salesâ€"was at a two-year high.
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But a steady stream of foreclosures likely coming onto the market over the next year will continue to push down prices, experts say, discouraging house hunters from sealing the deal on a home. Even if eroding prices doesn't scare off would-be buyers, difficulties in getting a mortgage could still derail the process.
Still, experts are optimistic that the housing market is making headway.
"The table is nicely set," Gillespie says. "Let's just hope we continue on this slow and steady pace that we've seen the last three or four months."
Meg Handley is a business reporter for U.S. News World Report. You can follow her on Twitter or reach her at mhandley@usnews.com.
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