• The homeownership rate fell to 64.8 percent in the second quarter.  It marks the lowest ownership rate in nearly 20 years.  After peaking at 69 percent in 2004, the ownership rate has been steadily falling, at first from the aftermath effects of housing market bubble-crash to the ongoing tight mortgage availability conditions now.
  • The falling homeownership in recent years is partly due to the struggles of first-time buyers.  Lower wages and larger student debts among recent college graduates have limited the millennial generation from taking advantage of the historically low interest rates.
  • Though the homeownership rate fell, it is worth noting that there were more homeowners in the latest data then before.  It’s just that the renting population grew faster.  Specifically, over the past 3 months, the number of renting households increased by 312,000, while the number of homeowners increased by 54,000.
  • The strange pattern of more homeowners but a falling homeownership rate (because of an even faster rise in the number of renters) will continue for the next 2 years at least.  That’s because household formation of young adults who had been living with their parents will seek out their own housing with an improving economy, first as renters before making the shift to homeowners.  This trend also means that housing demand for both home purchases and rentals will be on the increase.
  • Too much homeownership through easy credit can bite back painfully as witnessed in the past decade in the U.S.  At the same time, very tight underwriting standards limits many young adults from becoming successful homeowners.  It is worth recalling that sustainable homeownership without the bubble and foreclosure can drastically change a country.  Think Australia.  Former convicts (mostly of minor crimes) when given a land to own were able to transform themselves into responsible citizens.  These transcendent experiences of former convicts are the key reasons that the country Down Under came to be one of the wealthiest countries in the world.

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