Homeownership Rate Rises in 2017
Last week, the US Census Bureau reported the total homeownership rate in Q4 2017 improved to 64.2% from 63.9% in Q3. Even after a year of gradual rate hikes and sustained home price appreciation, more American households are transitioning from renting to homeownership.
The national homeownership rate has hovered to some of the lowest levels in the past fifty years. However, housing activity toward the end of 2017 was unseasonably strong. Destruction from Southeastern hurricanes and California wildfires spurred construction activity and even with the rate hikes, mortgage rates are low by historic standards.
The national homeownership rate hit its highest level in 2004, reaching 69.1%. As the homeownership rate recovers, the millennial demographic (18-35-year-olds) and the Generation X demographic (35-44-year-olds) are some of the most greatly impacted. According to Trulia chief economist Ralph McLaughlin, “Increases in homeownership amongst these two [demographics] are a sign that the scars of the Great Recession are finally starting to heal.”
The share of first-time home buyers entering the market is starting to increase as well. Rising rents, home price appreciation, and student debt are consistently some of the leading reasons why would-be home buyers are delaying purchase. As the younger demographics start to shop, the demand dynamic has shifted, and the housing industry needs to replenish inventory. Short housing supply will likely continue to create a competitive market. According to the National Association of Realtors (NAR), available housing inventory has dropped to the lowest level since 1999, when the organization started tracking this metric.
As home prices and down payments continue to appreciate, many renters are struggling to save for a down payment. The down payment is consistently reported as the number one obstacle to homeownership. Programs like HomeFundItTM provide a faster track to buying a home. Prospective buyers are able to crowdfund their down payment from family and friends and alleviate the burden. Learn more about HomeFundIt here.
Sources: MarketWatch, Zillow