Homeownership at its lowest rate since 1995

From Bloomberg news comes the story of home ownership at its lowest rate in 18 years:

The share of Americans who own their homes was 65 percent in the first quarter, down from 65.4 percent a year earlier and the lowest level since the third quarter of 1995, the Census Bureau reported today. The vacancy rate for rented homes dropped to 8.6 percent from 8.8 percent a year earlier, while vacancies for owner-occupied houses fell to 2.1 percent from 2.2 percent.

This reduction corresponds with increasing investment by landlords:

“Credit conditions are still tight and investors are taking advantage, in the interim, of favorable yields,” Paul Diggle, property economist for Capital Economics in London, said in a telephone interview. “They’re making hay while the sun shines.”
Diggle said the homeownership rate will continue to fall throughout the year. It peaked at 69.2 percent in June 2004, spurred by easy credit.

Rent or Buy?

The Wall Street Journal included a column on Saturday about a dilemma facing many potential homebuyers in recent years - a dilemma made worse by the collapse of the real estate bubble - whether to rent or to buy:

The worst part of the house hunt, however, isn't the real-estate agents repeating, "Now is a great time to buy!" Nor is it the multiple offers anything half-decent seems to attract. It's the arguing between Alejandro and me whenever we broach the topic of whether it is technically smarter to rent a house or to buy one.

"Renting is just throwing your money away each month!" Alejandro declares.

"Only a moron buys in a place where it's cheaper to rent! How can you not see something so obvious?" I answer, charmingly.

While the columnist lives in Los Angeles, the same considerations apply throughout the country.

CNN Money posted an article last year summarizing the calculations for making such a decision.

Be careful how you hold your investment properties; New IRS "high wealth unit"

It was announced last week that the IRS has established a new unit for the purpose of discovering hidden assets and income of wealthy individuals:

The high-wealth unit is focusing on trusts, real estate investments, privately held companies and other business entities controlled by rich individuals.

H/T Reuters

While the announced intention is to focus on international investments and activities, those investors who employ layers of trusts, LLC's and related entities to hold real estate should view the above references ominously.

While use of sophisticated legal structures can be legal, in other instances they "mask aggressive tax strategies," [IRS Commissioner] Shulman said.

And don't waste time wondering if your activities qualify as "high wealth." If you catch the IRS' attention, you will be considered "high wealth" regardless of what you man own or earn.

Read the Reuters article for more information.