"Homeownership rates for those under 35 ... rose to 35.6 percent, the highest it has been since October 2016."
Homeownership rates are slowly crawling upward. But fewer than two-thirds of the nation’s households owned their own homes at the end of Q3 2017 according to the U.S. Census Bureau. Rates climbed slightly between the second and third quarters of this year, from 63.7 percent at the end of June to 63.9 percent at the end of September. The bureau noted that this increase was not “statistically different” but pointed out that it is a full percentage point higher than it was at the end of June 2016, when homeownership was at its lowest level since 1965. Homeownership peaked at nearly 70 percent during the housing boom.
Homeownership on the Rise
While national numbers are a good measure for real estate investors who wish to simply track trends, regional numbers are better for strategy and planning. Geographically, homeownership is primarily on the rise in the Midwest, where over the space of three months (from June 2017 to September 2017), homeownership rose 1.1 percent. Nearly 70 percent of households in the Midwest live in homes they own rather than rent. On the other hand, the West (58.9 percent), South (65.5 percent) and Northeast (60.4 percent) all simply held steady, indicating that renting is likely still a near-necessity for those living on the West Coast and that the relatively more-affordable South could be leveling out, with more renters choosing or finding themselves financially compelled to continue renting. So they can live closer to the center of metro areas but also finding options for purchasing if they move farther out.
Moving on Up
The Census Bureau indicated young adults are finally making the move, en masse, into household formation and home-buying. Homeownership rates for those under 35, the definition of “Millennial” according to this report, rose to 35.6 percent, the highest it has been since October 2016. Given that this age group is always the most likely of any age group to rent, this rise in homeownership rates is particularly meaningful. Simply because it could herald a change for markets with large numbers of Millennials. Not only might retail home sales start to climb, but levels of housing affordability will become increasingly important since most Millennials are already saddled with heavy student loan debts, credit card debt, and uncertainty about their employment in many cases. Markets where homes are valued such that Millennial households can, in fact, obtain a 30-year fixed-rate mortgage could become highly attractive in the next 12 to 24 months if Millennials continue to feel interest in buying.