Homeownership sets sail

Posted by on February 19th, 2016

 

After almost two years of steady decline left the homeownership rate at its lowest level in 48 years, it ticked up slightly to 63.8 percent in the fourth quarter of 2015.

With the improving job market and more new construction, perhaps the homeownership rate has finally found its floor.

Driven by first-time buyers, total home sales grew 7 percent in 2015 – the best year since 2007 – and a welcome contrast to the decline of 2014.

First-time buyers accounted for 32 percent of 2015 sales, and loosening credit and growing equity boosted existing home sales by 14.7 percent.

Many of the 9 million owners who lost homes during and after the Housing Crisis are finally starting to recover their financial footing, and are ready to buy again – albeit with a bit more caution.

Home ownership among Gen-Xers (age 35 -50), among the worst hit during the crisis, increased to 59.3 percent from 58.1 percent.

Last but not least, renters – many of whom swore they would never give up their freedom for a mortgage – have finally grown tired of skyrocketing rents.

A tightening real estate market allows landlords to squeeze prices higher – and even the most hard-core renter’s eyes must pop open to see the light: They’re just lining someone else’s pockets.

Renter household formation slowed to just 300,000 year-over-year in the fourth quarter compared to 1.3 million in the third.

Tapering renter household formation helps the homeownership rate, which is measured as the percentage of households who own versus those who rent.

Some 162,000 new owner households were formed between the fourth quarter of 2014 and 2015, up from 123,000 the previous year.

These figures are still estimates until verified, but certainly reasons to be optimistic.

Most analysts expect it to continue rising steadily for the next few years.