Homeownership rates plummet

A recent report from Morgan Stanley found homeownership in the United States is at a historic low, at 65.9 percent. When delinquent mortgage borrowers were factored into the calculation, the rate dropped to 59.2 percent, the lowest rate homeownership has hit since 1965.

Morgan Stanley analysts told CNN in an interview that homeowners who are defaulting on their loans can stay in a home for months due to a slow foreclosure process by the banks, and should be factored in as well. Between unemployment causing borrowers to default and banks and GSEs tightening restrictions on mortgage servicing, many Americans have turned to renting.

"For the first time in history, the government is no longer promoting homeownership for all Americans, leading to a reconsideration of housing-related public policy," Morgan Stanley said.

According to the Morgan Stanley Housing Market Insights Report, when homeowners default and push distressed properties into the market, the homeowners become renters and the property becomes a potential single-family rental unit. This creates a demand for rentals which further encourages consumers away from homebuying.  

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