High foreclosure rates and a strong rental market pushed the homeownership rate in the U.S. to a 15-year low, even as projections for the housing market grew brighter.
The 65.4% rate in the first quarter is down from the 66% rate in the fourth quarter and 66.4% in the first quarter of last year, according to the Census Bureau. Before the housing bubble burst, homeownership reached a high of 69.2% in 2004.
The current rate is low compared with the last decade partly because earlier homeownership rates were inflated by people who hadn’t made down payments and were really “renters with an option to buy,” said Richard K. Green, director of USC’s Lusk Center for Real Estate.
However, several reports in the last month suggest the outlook for the struggling housing market is promising.
Pending home sales are at their highest level since April 2010, according to the National Assn. of Realtors. Lawrence Yun, the group’s chief economist, said the market “has clearly turned the corner.”
Price declines are easing. Housing data provider Zillow said last week that home values are bottoming in most major markets and are set to begin rising in metropolitan areas such as Los Angeles.
And recent gross domestic product numbers showed improvement, thanks in part to investment in the residential market, said Patrick Newport, an analyst at IHS Global Insight.
Rents, however, are at a post-recession high at a median $721 a month. Vacancy rates at rental properties fell to 8.8% — their lowest level in a decade.
Young Americans are now heavily inclined to lease, rather than own, their homes. The rate of American homeowners ages 35 and younger fell to its lowest point since 1994 as many opted for leased apartments and shared spaces.
With the transition, especially in California, of buying to renting, what have you done to keep business driving forward?