Rate of Homeownership Hits 50-Year Low
More Americans have become renters. The share of Americans who own their homes dropped to 62.9 percent in the second quarter, the lowest rate since 1965, the Census Bureau reported Thursday. That also marks the second consecutive quarterly decrease. In the previous report, the home ownership rate was at 63.5 percent – still far from its peak in June 2004 of 69.2 percent.
"One of the biggest hurdles now is affordability," Mark Vitner, a senior economist at Wells Fargo Securities in Charlotte, N.C., told National Mortgage News. "Home prices are rising so much faster than incomes, so it's hard for buyers to save for a down payment."
Indeed, younger households are reportedly struggling to branch out on their own, unable to save for a down payment, amid heavy student loan debts and rising rental costs. The home ownership rate for 18- to 35-year-olds dropped to 43.1 percent in the second quarter, the lowest level since 1994, according to U.S. Census data.
But the numbers aren’t are all that dismal.
“The broader picture suggests a degree of economic strength: Renters are spurring a steady increase in overall household formation,” The Wall Street Journal reports. “Renter-occupied housing units jumped by 967,000 from the same period a year earlier. Overall, household formation has been fairly steady since the early days of the expansion. A rising number of households suggests more people are optimistic enough to strike out on their own and helps further spur growth as they buy furniture, start families and move up the economic ladder.”
The growing numbers of renters are still likely to one day become buyers. Case in point, 81 percent of 18- to 29-year-olds recently surveyed by the National Association of Home Builders said they want to be able to buy a home one day. What’s more, the majority all age groups of the more than 2,800 Americans surveyed say they view owning a home as a good investment.
Source: “Homeownership Rate Tumbles to the Lowest Since 1965,” National Mortgage News (July 28, 2016) and “U.S. Homeownership Rate Falls to Five-Decade Low,” The Wall Street Journal (July 28, 2016)
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