The NYT has a worthwhile article reporting on the sharp falloff in the homeownership rate in the last two years. It would have been useful if it has spoken to an economist who was not surprised by the crash of the housing bubble which led to this falloff. One of the experts cited in the article is from the Joint Center for Housing Studies at Harvard University which actually made a point of contesting the existence of a bubble in the housing market as it actively promoted homeownership among moderate-income families. It would have been useful to include this background in this article. At one point the article reports that rents have been rising rapidly because of the large number of people who have lost their homes and are now seeking rental housing. Actually, while there are places in which rents have been driven up, especially for moderate income families, there is still a new record rental vacancy rate. The article reports that rent has risen about 11 percent since 2005. While this is true of rent component of the consumer price index (CPI), this has been driven largely by utilities. The better measure of pure rent is the owner's equivalent rent component of the CPI. This component has risen by 9.7 percent over the last three years, somewhat less than the overall rate of inflation.
--Dean Baker
