The U.S. homeownership rate fell in 2011 to 66.15%, according to data released today by the Census Bureau. That was the lowest homeownership rate in 14 years, since the 65.7% rate in 1997.

Conclusion: The political obsession with homeownership in the 1990s and early 2000s raised homeownership in the short run to an artificial and unsustainable level of 69% by 2006, but failed in the long run to create a homeownership rate that was sustaintable.  In the process, numerous government policies turned good renters into bad homeowners, created a housing bubble, waves of foreclosures, and a subsequent housing meltdown and financial crisis. In other words, the chart illustrates how government policies (monetary, mortgage market, GSEs, CRA, affordable housing, etc.) created an unsustainable “homeownership bubble” that is still deflating.  It’s likely that the homeownership rate will continue to fall for at least several more years, until we eventually get back to the more sustainable 64-65% homeownership rate that prevailed from 1975-1995 before various government policies destabilized the U.S. housing market.