24/7 Wall St. ranked the states by homeownership. Here are the top and bottom of the list:
50. New York: 53.7%
49. California: 54.8%
48. Nevada: 56.8%
47. Hawaii: 58.3%
46. Texas: 61.7%
5. Iowa: 71.3%
4. New Hampshire: 71.3%
3. Minnesota: 71.5%
2. Vermont: 72.2%
1. West Virginia: 72.5%
The two states with the lowest levels of homeownership are not surprising given their housing prices and large urban areas though I would guess many people would not pick Nevada and Texas to be there. On the other end, the five states with the highest homeownership rates tend to be less dense and more affordable. If, as the article before the rankings suggest, homeownership is indeed a marker of the American Dream, does that mean the people in these five states with the most homeownership are more likely to be living the American Dream? I’m guessing there would be some debate about that.
Millennials buying homes helped push the national homeownership rate higher:
The homeownership rate for Americans under 35 jumped to 36.8 percent in the third quarter, highest in five years, the Census Bureau said Tuesday. The share of millennial homeowners was up sharply, from 36.5 percent in the second quarter and 35.6 percent a year earlier. That’s still below the historically normal 40 percent-plus share for Americans that age.
But the young adults, largely first-time homebuyers, drove the national homeownership rate to 64.4 percent – highest since 2014 – from 64.3 percent the prior quarter…
Skylar Olsen, director of economic research for real estate site Zillow, says the slowing housing market actually has aided millennials who are facing somewhat less competition as they hunt for their first home…
The surge in millennial homeownership is a sign the recent housing slowdown is likely temporary, McLaughlin says. “Because that group is so big, it can help support the U.S. housing market indefinitely,” he says.
Millennials are good for something! Someone has to want to buy all those homes that Baby Boomers will soon make available.
Seriously though, two thoughts based on this data:
- Even with this news, expect the increasing ability of millennials to buy homes to lead to steady progress, not huge changes in homeownership (which had reached record low rates).
- Even with their economic troubles, millennials would prefer not to rent in the long run and would like to own homes, preferably in the suburbs.
For the housing market to really take off, both millennials and Baby Boomers need to want to and be able to move into homes they want.
A report from Pew Charitable Trusts ranks five suburbs south of Chicago – Olympia Fields, South Holland, Flossmoor, Matteson, and Lynwood – in the top ten nationally for homeownership rates for blacks. Here is how this happened:
“We took a strong approach to diversity back in the 1970s and 1980s,” De Graff said. “We passed the strongest fair housing ordinance in the nation.”…
Flossmoor and South Holland are among towns where policies embrace values of diversity. On Aug. 20, the Flossmoor Village Board adopted a set of “Guiding Principals for Diversity & Inclusion.”…
“The white population of this area shrank dramatically from a majority of 62.6 percent in 1990 to 37.6 percent in 2000,” his report said…
Mayors offered other analysis about the Pew report that sheds light on why several south suburbs lead the nation in black homeownership rates. Burke and De Graff said Olympia Fields and South Holland have few multi-family housing units and that their communities consist mostly of single-family homes.
On one hand, this would seem to signal progress. Many suburbs were closed to blacks and other minorities for decades. Only in the last few decades decades have blacks been able to move into more communities and the population shift has picked up in recent years. On the whole, the suburbs are now more non-white.
On the other hand, the story hints at ongoing difficulties. The homeownership rate for blacks on the whole in the United States is still low: 41%. The suburbs just to the west of these suburbs – categorized in the story as southwest suburbs – have a very low percentage of black residents. Finally, the white population dropped in these suburbs in the 1990s as blacks moved in. White flight continues.
Does this all represent success – access to the suburban American Dream for blacks – or an ongoing story of exclusion as whites flee and limit black homeownership to a relatively small portion of a large metropolitan area?
Homeownership, like owning a car, is often viewed as a key feature of American life. Here is some comparative data on homeownership across countries:
- The United States is nowhere near the top of this list. It is #42.
- There are a number of less wealthy countries that have significant higher rates of homeownership than the United States.
- And this is even with a federal government that subsidizes homeownership and a strong cultural ideology (examples here and here) promoting homeownership in the United States.
- This is a reminder that fewer than two-thirds of Americans own their dwelling. Even if it may be a goal of many Americans, not everyone has the resources or opportunities to reach that goal. And the differences in access to homeownership across groups can be stark.
- Comparing rates of homeownership may not tell the whole story of what kinds of homes are owned or the size of these homes. Famously, the United States has the largest new homes in the world. So perhaps Americans do not just want to own a home; they want a certain kind of home – a sizable single-family home in the suburbs – that meets their standards.
One analyst suggests the falling homeownership rate will continue to fall:
Burns predicts the homeownership rate will continue to fall through 2025. Which means that millennials will be renting for a lot longer than their parents’ generation did.
In 2004, when the overall homeownership rate peaked at just under 70 percent for all age groups, those born in the 1970s were 25–34 years old, moving out on their own and forming new households…
Today, with mortgages harder to get and memories of the housing bust fresh in buyers’ minds, the homeownership rate among 25–34-year-olds has fallen to just 39 percent…
Based on his estimates, the overall homeownership rate will fall to just 60.8 percent by 2025, the lowest since the mid-1950s.
As noted in the last paragraph of the article, there will still be more homeowners than before (because the population of the United States continues to increase) but the percentage of Americans owning homes will drop. If the rate matches that of the mid 1950s, we would be back in a early suburban boom era except it would be hard to imagine a similar new boom on the horizon.
The American homeownership rate is 63%, matching 1993 levels:
Overall, home ownership, the cornerstone of the American Dream, is down to 63 percent, a far cry from the 69 percent registered in 2004. The Joint Center for Housing Studies of Harvard University’s annual “State of the Nation’s Housing” report said current home ownership percentages rival that of 1993.
Those figures, however, are much worse for minorities, especially blacks. “The homeownership rate for minorities continues to lag: It peaked at 51.3 percent in 2004, and has now fallen to 47.2 percent. Of all minority groups, African Americans have the lowest rate of homeownership, just 43.8 percent,” said the report.
The reason for the decline is the languishing economy and poor pay. Harvard said that a key factor is the “steady erosion” of incomes since the recession began.
While I would assume most politicians would continue to support the idea of homeownership (and most major politicians since the early decades of the 1900s have done so), I haven’t really heard much about this in policy debates. Perhaps this is because other issues – immigration, gay marriage, taxes – have been in the spotlight but homeownership was a pretty foundational idea for much of the last century of American life. Or, perhaps this is because few people have ideas for how to increase homeownership, especially with the housing crisis of the late 2000s still looming large in the rearview mirror.
If a politician wants to make a novel/old tried and true argument for the 2016 election, they could push homeownership for all again. The rental market is tight, the bottom end of the housing market is sluggish, and I imagine there are a lot of voters who would like to hear how they can purchase a home.
New data from the Census Bureau shows the homeownership rate continued to decline through the end of 2014:
The homeownership rate in the United States dropped to a 20-year low of 64.5 percent in 2014, according to new data released by the Census Bureau…
In the years since 1984, which is the first year reported on Table 15, homeownership peaked at 69.0 percent in 2004. In the last decade, according to the Census Bureau, the annual homeownership rate has steadily declined…
Among the 75 largest metropolitan statistical areas in the nation, as reported in Table 16 in the Census Bureau’s “Housing Vacancies and Homeownership” data, the Los Angeles-Long Beach-Santa Ana area had the lowest homeownership rate in 2014. At 49.0 percent, it was the only one of the top 75 metropolitan statistical areas that had a homeownership rate of less than 50 percent.
New York-Northern New Jersey-Long Island had the second lowest homeownership rate at 50.7 percent. Bakersfield was third lowest with 52.8 percent. Las Vegas-Paradise as fourth lowest with 53.2 percent. Fresno was fifth lowest with 53.9 percent…
The Richmond, Va., metropolitan area had the highest homeownership rate at 72.6 percent. Birmingham-Hoover, Ala., was second highest with 71.9 percent. Grand Rapids-Wyoming, Mich., was third highest with 71.6 percent. Detroit-Warren-Livonia was fourth highest with 71.2 percent. And St. Louis, Mo., was fifth highest with 71.1 percent.
Find the full data here.
While it is one thing to track this rate over time, what are the larger implications? How should policy decisions change? Are there some who see this as desirable? How might the housing industry rebound?
The latest Census data shows Americans under 35 now have the lowest recorded homeownership rate for that age group:
In the second quarter of 2014, the rate of homeownership among householders who are under 35 dropped to the lowest number ever reported since the Census Bureau first started recording quarterly homeownership rates 21 years ago.
In a news release published this week, the Census Bureau said that the homeownership rate among householders under 35 was 35.9 percent in the second quarter of 2014. That number was not only lower than any quarterly rate going back to the fourth quarter of 1993 (the first quarterly rate reported) but was also lower than any of the annual homeownership rates for under 35s that the Census Bureau has published since 1982.
However, a Census Bureau official also said that the 35.9 percent homeownership rate for under 35s for the second quarter was not statistically different from the rate for the first quarter of this year (36.2 percent) or the fourth quarter of 2013 (36.8 percent).
These figures on their own could support a number of different arguments about the fate of homeownership in the United States. On one side, those promoting more urban lifestyles could say millennials aren’t buying more homes because they are moving to cities and looking to rent units in order to have more flexibility and take advantage of the urban lifestyle. On the other side, others might note that this data comes 5+ years into the bursting of a housing bubble and that millennials will show more interest in homeownership when the economy picks up. Yet, to make such claims with this data alone would be irresponsible. To be honest, we need a lot more data than this to support any argument and know whether younger Americans do or do not want to own homes in similar numbers to past generations.
See the full Census report regarding 2Q homeownership rates here.
The homeownership rate in the United States dropped again in the beginning of 2014:
The homeownership rate in the U.S. declined to the lowest in almost 19 years as rising property prices and mortgage rates held back demand.
The share of Americans who own their homes was 64.8 percent in the first quarter, down from 65.2 percent in the previous three months, the Census Bureau said in a report today. The rate is the lowest since the second quarter of 1995, when it was 64.7 percent…
“The homeownership rate is held back by slow job growth, tight mortgage credit and declining affordability,” Jed Kolko, chief economist of San Francisco-based property-listing service Trulia Inc., said in an interview before the report was released. “We’ll see it stay around this level for some time.”
Sam Zell, chairman of apartment landlord Equity Residential (EQR), said yesterday that the rate will fall to as low as 55 percent because more Americans are choosing to rent as they postpone getting married and having children. As of 2010, about 54 percent of adults were married, down from 57 percent a decade earlier, according to Census Bureau data.
Interesting to hear economists and those in real estate suggest there are a variety of social factors affecting homeownership. Beyond the troubles of the housing market, the issues include family formation and possibly different preferences among younger Americans for where they want to live and how they want to do it.
Another interesting tidbit from this article: the homeownership peak was June 2004. This predates the housing crash by several years and is now almost 10 years ago.
A new book by sociologist Patrick Sharkey highlights how neighborhood conditions contribute to persistent inequality by race:
Put more bluntly:
Even if a white and a black child are raised by parents who have similar jobs, similar levels of education, and similar aspirations for their children, the rigid segregation of urban neighborhoods means that the black child will be raised in a residential environment with higher poverty, fewer resources, poorer schools, and more violence than that of the white child.
This might not seem to make sense: education gains have been fairly substantial, so shouldn’t income and wealth follow? The problem is that whites are more likely to lock in gains over generations. Blacks are more likely to be in a higher income centile than their parents than whites (55/50), and less likely to be in a lower one (44/49). But they’re more likely to be in a lower income quintile (53/41) and less likely to be in a higher income quintile (35/45). Whites are more likely to inch down and leap up the socioeconomic ladder; for blacks, vice versa.
By way of explanation, Sharkey points to the work of Northwestern sociologist Mary Pattillo on the black middle class: “When white families advance in economic status, they are able to translate this economic advantage into spacial advantage by buying into communities that provide quality schools and healthy environments for children. An extensive research literature demonstrates that African Americans are not able to translate economic resources into spacial advantage to the same degree.” In the real world, this is the reality for middle-class neighborhoods like Chatham, which struggle to maintain their economic and residential base while buffeted by violence creeping in from neighboring communities.
This research counters the idea that decreased educational differences necessarily leads to reduced wealth and spatial differences. There are other important factors at work, including the spatial context. Education is not a silver bullet that solves all of the issues related to poverty.
This would seem to line up with research on wealth differences between whites and blacks (see Black Wealth/White Wealth by Oliver and Shapiro). Even if blacks have made educational gains, wealth is partly generational. Wealth really helps with buying a home in middle- and upper-class neighborhoods that then offer better schools, environments, and social capital. And this homeownership gap is still large in the first quarter of 2013 (Table 16): 73.4% for whites, 43.1% for blacks, 45.3% for Hispanics, and 54.6% for all other races.