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Homeownership Rate Falls

Housing indicator hits 15 year low as more people rent
  • May 06 2012

The last time the homeownership was this low, Bill Clinton was president.

The impact of the bursting of the U.S. housing bubble is still being felt across the country. In the first quarter of 2012, the homeownership rate fell to a 15-year low according to the Census Bureau. The 65.4 percent rate in the first quarter of 2012 is down from the 66 percent rate in the fourth quarter of 2011 and from the rate of 66.4 percent in the first quarter of 2011. Before the housing bubble burst, U.S. homeownership had been as high as 69.2 percent in the fourth quarter of 2004.

Further underscoring the shifts in the housing market are changes that are occurring in rentals. In the first quarter of this year, with many potential home buyers choosing to rent, the national apartment-vacancy rate dropped to 8.8 percent, the lowest level since the second quarter of 2002, and down from 9.7 percent in the first three months of 2011. The number of occupied rental units increased by 1.4 million in first quarter 2012, while the number of owned/occupied houses fell by 491,000, according to the Census data.

Regionally, homeownership in the West fell below 60 percent (59.9 percent) in the first quarter. The highest homeownership rates were in the Midwest (69.5 percent), followed by the South (67.5 percent) and the Northeast (62.5 percent).

Younger Americans fared worst. For Americans in the 35- to 44-year-old age group, the homeownership rate dropped to just over 61 percent in the first quarter from close to 69 percent throughout 2006.  For those under 35, the homeownership rate was 36.8 percent. These lower rates are significant, as they coincide with household formation, which usually signifies demand for homeownership. Only those 65 and older showed any signs of stability in homeownership rates throughout the market downturn.

Minorities, which traditionally have a lower ownership rate, also saw their rates decline in the first quarter. African-American homeownership fell to 43.1 percent from 45.1 percent at the end of 2011. Hispanics' rate slipped to 46.3 percent from 46.6 percent.

 

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