While homeownership is declining across the United States, the drop is even more precipitous in some of America’s largest cities, according to a new report.
While homeownership is declining across the United States, some of American’s largest cities are reaching stunning new lows, according to a new report published Thursday.
From 2000 to 2015 — during which the economy endured a whirlwind of ups and downs, including a housing boom, recession and renewed growth — homeownership declined in 90 percent of America’s largest cities and in 96.2 percent of major metropolitan areas boasting more than 1 million residents, according to CityLab, an online news site from The Atlantic.
“It’s just so much more expensive, and if you’re living in the city, chances are you’re more likely to be single and more likely not to have kids,” said Laurie Goodman, the vice president of housing finance policy at the Urban Institute, and the co-author of the study Homeownership and the American Dream. “People buy their first home generally when they’re married, and they’re thinking about a family.”
The number of homeowners is especially low in major affluent coastal cities, according to CityLab’s data. The homeownership rate is under 50 percent in Los Angeles. In New York, slightly more than half of the population are homeowners. The rate is just 52 percent in San Diego, 53.5 percent in San Francisco and 56 percent in San Jose.
Although overall homeownership rates are still comparatively high across the Rust Belt and Sun Belt, larger cities in those regions including Tampa, Las Vegas, Miami and Phoenix all saw homeownership declines of 7 or more percentage points over the same 15-year period, according to the report. Comparatively, homeownership fell by just 2 percent in San Francisco and roughly stayed the same in New York City.
A number of demographic factors are at play as well. Metropolitan areas tend to be diverse, and the rate of homeownership among non-white individuals is extremely low.
“If you look at the homeownership gap between white and everyone else … it’s very large,” Goodman said. “And if you look at the population, it’s becoming increasingly more diverse.”
“That is one demographic factor that makes it harder to return to the homeownership rates we used to have,” she added.
The general attitude toward homeownership has changed subtly too, Goodman said. Baby boomers saved for years — shirking things like vacations — to buy their first home, but millennials are more likely to buy a home when it’s convenient, Goodman explained.
“You just wanted to save to put down that downpayment on your first home because that’s the way you built wealth,” she said. “There’s no way my children’s generation can think — going through the recession — that homeownership is the wealth building tool that my generation thought it was.”
Goodman doesn’t see any policy changes on the horizon that could lead to a sudden rise in homeownership either. The Trump administration’s major tax overhaul actually makes homeownership even less appealing, Goodman said. With a higher standard deduction, fewer taxpayers will opt for itemizing variables like the mortgage interest deduction, and a cap on deductible state and local taxes hurts homeowners even more.
As home prices continue to rise, however, Goodman believes attitudes could change and a younger generation will see homeownership as a wealth tool, just like their parents.