Burns believes home ownership will return by 2025 to around 67 percent, as previously foreclosed borrowers return to the housing market, cyclical trends improve and positive demographics start to carry more weight.
One thing Burns doesn't mention, though, is negative equity, or borrowers who owe more on their mortgages than their homes are worth.
"It's not just negative equity that we often focus on, but it's also insufficient equity. All the people who have those primary loans that are somewhere between 80 and 100 percent LTV (loan-to-value) also basically don't have don't have access to the credit markets," notes Mark Flemming of CoreLogic, which today reported negative equity at 22.1 percent of all homes with a mortgage at the end of the third quarter.
As home prices refuse to stabilize, and in fact continue to fall, negative equity will only increase. The vast majority of the ten plus million people who are underwater are still paying their mortgages, but they are deeply underwater, 30 percent and higher. That will take a long time to correct, and will stagnate much of the market for years to come, as these owners are unable to sell.
Which leaves us to ask, is a 62 percent home ownership rate so bad? It's still far higher than in most European countries. Why is home ownership so intrinsic to the "American Dream?" I'll leave that to you faithful readers to discuss.
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