Homeownership reached a record high in 2004 of nearly 70 percent, parallel to home sales approaching all-time record highs. Homebuying was such a popular sport that one in 10 U.S. residents owns a second home.

What a difference a recession makes.

By December 2007, homeownership was down to 67.8 percent, the largest year-over-year drop since 1965, when the Census Bureau first began keeping track. Simultaneously, the new home sales and existing home prices made record drops.

One reason is the mortgage meltdown, caused by rising interest rates following years of unbridled lending to subprime borrowers. Realtytrac, an online foreclosure marketplace, said foreclosure filings grew 75% year-over-year in 2007 to 2.2 million. More than one percent of all households were in some stage of the foreclosure process.

Not surprisingly, there were about 2.18 million empty homes for sale in the fourth quarter, up slightly from 2.1 million a year ago.

Consumer confidence is down, according to the Consumer Confidence Index to 87.9, down from 90.6 in December. They're worried about the job market and housing, and are curbing their spending, says the Conference Board. Consumers are responsible for nearly 3/4ths of gross domestic product.

Dr. Susan M. Wachter, professor of real estate and finance for the University of Pennsylvania's Wharton School, suggests that people are wising up.

In an index she founded, adjustable-rate mortgage applications dropped nearly 40 percent from January 2007 to January 2008. Applications for fixed-rate loans climbed over 60 percent. The number of borrowers using private mortgage insurance jumped 41 percent in the first nine months of 2007, a trend that is expected to continue as mortgage insurance premiums are now tax deductible through 2010.

Dr. Wachter suggests that the appetite for risk is gone. In a less risky environment, owning can be made more attractive to first-time buyers -- 40 percent of the market. Putting them into fixed rate mortgages that will remain steady over the next five years will help, because adjustable rate mortgage payments can adjust as much as 155.6 percent in the same time.

In other words, if mortgage interest rates stay low, lenders lend wisely, homebuyers borrow wisely, and homeowners refinance wisely, we should be out of the mortgage meltdown soon. That's a lot of ifs, but it could already be happening.

Published: January 30, 2008

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.