Homeownership Nearing Historical Lows
The Federal Reserve may be comfortable with the direction of the U.S. economy. But most Americans are not. Other than slow wage growth, and unemployment issues, homeownership rates fell in Q1 2016 to the third lowest point on record.
It’s another indication that poor finances are greatly impacting the health of the U.S. consumer… The Commerce Department tells us ownership fell to 63.6% from a 63.5% low in Q2 2015. That rate was 67.8% when we first entered a recession. In April 2015, that rate fell to 63.7% -- its lowest since 1990.
All is not well… as we’re often told.
Meanwhile, as expected, rents are picking up steam. The median rent price just jumped 8.9% to $870 in the first quarter.
But none of this should come as a big surprise.
Household formation has been increasing, but much of that is being found in rental properties. Just a third of new household formation has been in homes.
As we noted in July 2015:
It’s not likely to reverse when the housing collapse becomes a distant memory either. In fact, according to the Urban Institute, homeownership could continue falling well into 2030, as reported by The Washington Post.
By that time, the rate could be as low as 61.3% — a number not seen for at least 50 years.
“Viewed another way,” notes The Washington Post, “A big surge in renters is coming. And this trend has major implications for the kind of housing we should be building, as well as all of the housing we’ve already built. Between 2010 and 2030, according to the report, a majority of the estimated 22 million new households that will form in America will be renter households.”