Homeownership Rate Continues to Slide

 

While homeownership rates have trended lower for all age groups, the deepest declines occurred among younger householders.
Courtesy of NAHB

According to the US Census Bureau, the seasonally adjusted homeownership rate declined to 66 percent during the second quarter of 2011. This is the lowest reading for homeownership since the first quarter of 1998. Overall, the homeownership rate is down 3.4 percentage points since the peak was observed back in mid-2004.

Since reaching their peaks sometime in the late 2004-early 2005 time frame, homeownership rates have registered net declines of: 6.1 percentage points for householders under the age of 35; 6.3 points for the 35-44 age group; 5.1 points for those 45-54; 4.6 points for those 55-64; 1 point for householders 65 and older.

Persistently weak labor market conditions have caused a significant share of younger householders to delay forming new households, whether through pairing up, moving back into their parents’ homes or going back to school. This dramatic slowdown in new household formations has become a major impediment to soaking up vacant units in many housing markets.

In addition, tight credit conditions are having an impact, as younger households have accumulated less wealth and thus are less able to meet stricter loan underwriting (read: down-payment) requirements. Add in concerns over the possibility of the federal government imposing limits to the mortgage interest deduction, and homeownership rates among younger households will likely struggle to rebound.

- Courtesy of NAHB