Homeownership Rate Continues Steady Decline
Forecast Is For More of the Same Until 2025
The so-called American dream of owning a home is losing some of its luster.
John Burns Real Estate Consulting, one of the nation's leading advisers to the real estate industry, crunched homeownership data and found that the overall homeownership rate has steadily declined since hitting its peak of 70 percent in 2004.
Since then, the homeownership rate has dropped 9.1 percent. Although homeownership is down in all age groups, Burns said the 35-and-younger age group has plummeted 21.2 percent. This is by far the largest decline of any of the age categories.
The homeownership rate will continue to fall through at least 2025 to 60.8 percent, Burns is predicting, and that would be the lowest rate since the mid-1950s. And although home sales are still rising, they're still far from the boom times of the early 2000s.
In 2004, nearly 50 percent of the people in 25-34-year-old group owned homes. But today, the homeownership rate of this group has fallen to just 39 percent, for a variety of reasons, one of which is the harrowing effects of the housing bust a few years ago.
ProBuilder.com reports that the number of occupied rental apartments jumped 1.7 percent in 2015, compared with 2014. At the same time, the homeownership rate overall was at 63 percent in 2015, down from 63.1 percent a year earlier. And just 949,000 new households were created in 2015, a slight decline from 2014 and below normal levels of 1.2 million.
Some Regions Not Following Suit
However, while the homeownership rate has fallen in the United States as a whole over the past decade, some areas are still booming and bucking the national trend, according to Zillow, a real estate marketplace.
The homeownership rate remained relatively unchanged between 2014 and 2015 in nearly half of the nation's 100 largest metro areas. The rate increased by more than 0.5 percentage points in 27 percent of those regions, and it dropped in the remaining areas by more than 0.5 percentage points.
The largest jumps in the homeownership rate were in Baton Rouge, La. (+3.9 percentage points); Springfield, Mass. (+2.4 percentage points); Fort Myers, Fla. (+2.3 percentage points); Portland, Ore. (+1.6 percentage points); McAllen, Texas (+1.5 percentage points); Birmingham, Ala. and Charleston, S.C. (+1.4 percentage points); and Nashville, Tenn. (+1.2 percentage points).
The largest declines were in Colorado Springs, Colo., and Knoxville, Tenn. (-2 percentage points); Tulsa, Okla. (-1.5 percentage points); Lakeland, Fla. (-1.4 percentage points); Spokane, Wash. (-1.3 percentage points); Buffalo, N.Y. (-1.2 percentage points); Winston-Salem, N.C., and Miami-Fort Lauderdale, Fla. (-1.1 percentage points); Minneapolis-St. Paul, Minn. and New Orleans, La. (-1 percentage points).
At the city level, the homeownership rate increased in Portland (51.4 percent to 54 percent); Denver (48.1 percent to 49.4 percent); and Seattle (45.5 percent to 46.6 percent). In all three cities the increases were driven by large jumps in the number of homeowners (3.6 percent for Portland, 4.4 percent for Denver, and 4.6 percent for Seattle).