Homeownership at lowest rate since 1997
Home sales may be rising, but the latest U.S. Census data are a reminder that investors are leading the rally. The rate of homeownership fell the most in the South.
The latest numbers from the U.S. Census Bureau suggest there is one group that may not be benefiting from the housing-market recovery: would-be homeowners.
The rate of homeownership fell to 65.4% in the fourth quarter of 2012, tying with the first quarter of 2012 for the lowest rate since 1997.
The rate of homeownership in the United States rose to 69.2% in 2004 and has been declining ever since, as the real-estate bust sent owners of foreclosed homes back to the rental market.
While the rate of home sales has risen steadily in the past year, many of those sales, particularly in areas hard-hit by the foreclosure crisis, have been to investors. Those investors see a chance for profit in the rising demand for rentals.
“The fact that the housing recovery is being driven principally by investor demand means that the slight decline in the homeownership rate in the fourth quarter is unlikely to be the last,” Paul Diggle, an economist at Capital Economics, wrote in a research note, as reported by The Wall Street Journal.
The number of new households formed, after rising from a low of 600,000 to 1.15 million in the third quarter of 2012, fell to 947,000 in the past quarter.
The homeownership rate is highest in the Midwest, at 69.7%, and lowest in the West, at 59.5%. From the last quarter of 2011 to the last quarter of 2012, there was little change in the homeownership rate in the Northeast, Midwest and West, but the rate in the South fell from 68.3% to 67%.
As you might expect, people over 65 have the highest rate of homeownership, at 80.7%, and those under 35 have the lowest, at 37.1%. But the age groups that lost ground between the end of 2011 and the end of 2012 were those 35 to 44 (down from 62.3% to 60.4%) and those 55 to 64 (down from 79% to 77.6%).
Economist Robert Shiller, co-founder of the Case-Shiller indices, suggested, in an interview with Fox Business News, that it may be another generation before the rate of homeownership shows a significant increase. He said:
You know the homeownership rate has been falling, and there is a recent paper by Stuart Gabriel that shows that the homeownership rate decline is not explained by demographic or economic factors, so it seems like people are turning away from homeownership, to some extent, and I think that’s because they were burned in this crisis and they’re just not coming back, so it might take another generation before we get the real enthusiasm back.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.