The Homeownership Rate & Middle-Aged Buyers

New data released by the U.S. Department of Commerce’s Census Bureau shows the homeownership rate was 64.7 percent during the second quarter of 2014. That’s down from an all-time high of 69.2 percent in 2004 and slightly lower than last year at this time. According to the official data and many media reports, the homeownership rate’s recent decline has been particularly focused among young adults and first-time buyers. The theory is that the housing market’s recovery has been slowed by a lack of young home buyers forming households of their own. However, a new analysis from Trulia’s chief economist, Jed Kolko, shows that it may, in fact, be middle-aged Americans – not millennials – who are missing from the homeownership equation. According to Kolko, when compared to the pre-bubble years of the late 1990s, homeownership levels among young adults are relatively unchanged and the rate among Americans between 35 and 54 years old has dropped. This is primarily due to the fact that younger Americans are getting married and starting families later in life. Because of this, the homeownership level among 18-to-34 year olds – though lower than the historical average – may represent the new normal. Middle-aged homeowners, on the other hand, would’ve been the first-time buyers of 10 years ago. And, because they would’ve been buying homes at the peak of the housing bubble, they would’ve been hardest hit by the subsequent crash. According to Kolko, this explains the decline in homeownership among middle-aged Americans.

Michael Rosenbaum

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