States with highest, lowest levels of homeownership

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.

 

Homeownership rate up, driven by millennials

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:

  1. 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).
  2. 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.

 

Reasons why five south Chicago suburbs lead the way in black homeownership rates

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?

Understanding homeownership in the United States through comparative data

Homeownership, like owning a car, is often viewed as a key feature of American life. Here is some comparative data on homeownership across countries:

HomeownershipRates

Several thoughts:

  1. The United States is nowhere near the top of this list. It is #42.
  2. There are a number of less wealthy countries that have significant higher rates of homeownership than the United States.
  3. 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.
  4. 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.
  5. 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.

Prediction: homeownership rate will continue to drop through 2025

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.

Homeownership rate continues to drop (63%); why aren’t politicians talking about it?

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.

Homeownership rate at 20 year low

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?