Housing advocates have been wringing their hands as they watch the nation’s homeownership rate slowly slip during the Great Recession from 70 percent to less than 64 percent today.
Homeownership in America dipped to 63.6 percent in the first quarter of 2017, virtually unchanged from 63.7 percent the fourth quarter of 2016. The homeownership rate was 63.5 percent in 2015, according to the U.S. Census Bureau’s recent Quarterly Housing Vacancies and Homeownership report.
However, the future growth of homeownership potentially lies in a different statistic buried in the sea of housing data gathered by Uncle Sam, experts say.
An analysis of the Census report by Trulia determined that owner households formed at double the rate of renter households in the first quarter of 2017. This is a clue that points to the possibility of a Millennial homeownership turn-around this year after a decade of gradual decline, Trulia concluded.
“Strong renter formation is one of the reasons why the homeownership rate has continued to drop since the onset of the housing crisis, so any sign this trend is reversing is something to take note of,” said Ralph McLaughlin, chief economist at Trulia.
One of the major impediments to homeownership is the inability for young Millennial renters to afford a down payment.
Seventy percent of renters recently surveyed by Zillow said saving for a down payment is more of an issue than debt on the path to becoming a homeowner. Millennial home buyers are typically buried in college loan debt.
The Midwest held the highest homeownership rate in the first quarter, at 67.6 percent, while the West held the lowest at 59 percent, the Census report shows.
Homeownership rates in the first quarter were also highest among homeowners aged 65 and older, at 78.6 percent, and lowest for homeowners aged 35 and younger, at 34.3 percent.
Here are other findings of the Census report:
• Non-Hispanic White Alone homeowners, as defined by the Census, held the highest homeownership rate in the first quarter, as well: 71.8 percent. (The concept “race alone” includes people who reported a single race alone—for example, Asian—as opposed to more than one race.)
• Asian, Native Hawaiian and Pacific Islander Alone homeowners held the second-highest homeownership rate at 56.8 percent.
• The Hispanic homeownership rate in the first quarter was 46.6 percent, according to the report. In 2016, the Hispanic rate markedly rose for the second straight year—a new emerging trend.
• Black Alone homeowners held the lowest rate at 42.7 percent—though still higher than the year prior.
The homeowner vacancy rate was 1.7 percent in the first quarter, while the renter vacancy rate hit 7 percent, the Census report shows.
Homeowner vacancy rates were highest outside metropolitan statistical areas (MSAs) and inside principal cities at 2.2 percent, followed by in suburbs at 1.3 percent.
Renter vacancy rates were also highest outside MSAs at 8.7 percent, followed by inside principal cities at 7 percent and in suburbs at 6.5 percent.
According to the report, 87.3 percent of the nation’s housing was occupied in the first quarter, with 55.5 percent owner-occupied and 31.8 percent renter-occupied.
The median asking sales price for vacant for sale housing in the first quarter was $176,900.
The median asking rent for vacant for rent housing, over the same period, was $864.
Regardless of the Census data, a survey by the National Association of Realtors (NAR), reported that nearly eight out of 10 Americans still believe that buying a house makes good financial sense. Here’s why:
• Long-term wealth. Owning a home is one of the best ways to build long-term wealth. Historically, a homeowner’s net worth has ranged from 31 to 46 times that of a renter, reports the Federal Reserve Survey of Consumer Finances. Homeownership today still represents a family’s primary means of financial advancement.
• Freedom. Homeowners are free to renovate, redecorate and modify their homes as they wish. If you want to paint the walls or make a simple landscaping change, there isn’t a landlord to stop you.
• A family investment. For many, homeownership is a lifestyle choice—a place to raise a family, build memories and be part of a larger community.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.