By now most of us have come to a troubling realization – the market has not made as strong of a rebound this spring as was once predicted. But while we may have come to terms with the fact that the market won’t be making the same run-ups of last year, the market may actually be in a worse state than we believe it to be, as homeownership rates have dropped to a nineteen-year low.
According to a recent report made by the US Census Bureau, only 68% of homes across the nation are owner-occupied, the lowest we’ve seen since 1995. Homeownership is also the lowest in the west, where only 59.4% of homes are owner-occupied. Meanwhile, the census also reported that rental vacancies stayed near record lows at 8.3%, and the median rent for available units reached an all-time high of $766 per month.
So why are we seeing these record numbers? Economists believe there are a few factors in play, the first being affordability. There’s no question about it, tight credit and increased home prices are certainly keeping many would-be homeowners off the market. A lack of houses on the market surely doesn’t help this problem either.
On top of all this, we’ve seen relatively large drop in younger homeowners. In fact, only 36.2% of household headed by someone younger than 35 owned their home in the first quarter, down from 41.3% in 2008. Many of these young adults are burdened with student loans as well, and combined with a soft job market, these young people are deciding to postpone homeownership.
“I think a lot of households will be renting instead of buying for some time,” stated Stan Humphries, Zillow’s chief economist.
Do you think these changing rates will turn around later in the year, or are these trends in homeownership simply changing over time? What are your thoughts?
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