Recession caused severe cut in Utah homeownership rate
Real estate • Recession reduced the rate to 71.1 percent, an 18-year low.
Published: August 26, 2013 09:06AM
Updated: February 14, 2014 11:33PM
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Tribune file photo Home ownership rates in Utah plunged from record highs during the run-up to the Great Recession to an 18-year low last year

Homeownership rates in Utah plunged from record highs during the run-up to the Great Recession to an 18-year low last year, underscoring the damage done by the worst economic crisis in Utah since the 1930s.

At the dawn of 2008, when the recession was just a month old, 76.2 percent of homes in the state were owned. Four years later, the figure had dropped to 71.1 percent — the lowest rate of homeownership since 1994, according to U.S. Census figures.

The decline mirrors a staggering employment decline that occurred during the recession. Some 91,000 jobs evaporated between December 2007 and the start of a slow recovery 27 months later.

“What we went through was so unique. This is a reflection of what happened in the housing market and the connection between jobs, income and homeownership,” James Wood, director of the University of Utah’s Bureau of Economic and Business Research, said Friday.

Wood estimated 50,000 to 60,000 households in Utah went from owning a home to renting.

The ownership decline was steepest between 2008 and 2011. It showed signs of moderating in 2012 as strong job growth returned to Utah, interest rates hit record lows and single-family construction picked up along the Wasatch Front and Washington County.

But at most, the 2013 ownership rate is likely to be flat compared to last year, said Juliette Tennert, chief economist at the Governor’s Office of Planning and Budget.

“You can see the true magnitude of this economic downturn,” Tennert said. “We have gone through [many] recessions over time. But the recession that we’ve just come out of was really of historical proportions. You can see that in these [ownership] rates.”

On Friday, the Commerce Department said Americans cut back sharply in July on their purchases of new homes, a sign that the recent rise in mortgages rates may weigh on the housing recovery.

Sales of newly built homes dropped 13.4 percent to a seasonally adjusted annual rate of 394,000. That’s the lowest pace in nine months. The annual pace remains well below the 700,000 that is consistent with a healthy market.

Perhaps not surprising, in Utah there was an equally sharp rise in ownership rates between 2006 and 2008, when home construction was booming in Utah. Tennert said the ownership rates during that period likely were “somewhat inflated” as banks made loans to would-be home buyers with weak credit histories.

“You probably had people at the peak who would more likely be renters [at] other times who were purchasing homes,” Tennert said.

The decline that set in during 2008 was probably aggravated when banks tightened their lending standards, which made it harder for qualified people to borrow money and buy homes, Tennert said.

Wood said many homeowners who could not afford their monthly mortgage payments resorted to renting their homes in order to save them from foreclosure. Even so, foreclosures in Utah skyrocketed to some of the highest rates in the U.S.

In 2010, more than one in 10 Utah homeowners were either struggling to pay their mortgage or were losing their properties to foreclosure, according to a Mortgage Bankers Association report at the time.

pbeebe@sltrib.com

Twitter: @sltribpaul

Homeownership rates fall

2003 • 73.4 percent

2004 • 74.9 percent

2005 • 73.9 percent

2006 • 73.5 percent

2007 • 74.9 percent

2008 • 76.2 percent

2009 • 74.1 percent

2010 • 72.5 percent

2011 • 71.4 percent

2012 • 71.1 percent

Source: U.S. Census Bureau