- The homeownership rate has plunged nearly 10 percent since the recession.
- Income disparity is causing the homeownership rate to decline.
- The hardest-hit are minorities.
- The desire to be a homeowner has not wavered, but economics are making it impossible for many.
California Association of Realtors CEO Joel Singer explains the public policy and economics behind the declining homeownership rate — and what, if anything, can be done about the downward-spiraling trend.
Singer is also the CEO of zipLogix and was instrumental in developing CAR subsidiary Real Estate Business Services (REBS). He has a thirty-year history of challenging the industry to face its threats while working on practical solutions for keeping the agent at the center of the transaction.
The homeownership peak was slightly over 69 percent in 2006 — and since then, it’s been on a decline. Is this a “hangover” from the subprime mortgage crisis — and does the number even matter?
Now, the homeownership rate is about 63 percent — back at levels we haven’t seen since the 1960s. “Generally, the homeownership rate is an indicator of relative wealth in your society,” explained Singer. It’s a way to accrue wealth and solidify a citizen’s standing in the market.
He also addressed whether the homeownership rate drop is a bicoastal concern or whether Americans in other areas of the country should also be concerned. “It’s correlated to urbanization to a degree, and to the costs on the coast, but the fact of the matter is, the trend is clearly not a very positive one,” Singer noted. And as interest rates increase, the rate of homeownership falls.
Is it an income-to-price problem? Qualifying for mortgages? Or is it generational — the ever-popular “it’s the millennials” theory?
Singer said that millennials’ historical homeownership rate is much lower than in the past, but he said that’s due to economics more than a generational issue. The delayed onset of marriage and children play a part, “but fundamentally, it’s economics that make it much more difficult.” In other words, homeownership is still part of the American dream.