Bust to Boom ?
The national homeownership rate has followed the trajectory of a bumpy rollercoaster with a series of up-and-down movements in the past 20 years , and the end of 2014 marked a period of notable decline . This downward trend has fueled speculation about the future of homeownership in the United States following risks exposed during the recession and foreclosure crisis , as the U . S . rate fell to the lowest level in more than two decades in the fourth quarter of 2014 . Specifically , Commerce Department estimates put the U . S . homeownership rate at 63.9 percent in the fourth quarter — a level the country has not seen since the third quarter of 1994 . In looking at the history of the national homeownership rate , it rose steadily through the late 1960s and 1970s , from 63 to 65.6 percent , before declining slightly in the early 1980s . To address a decade of stagnation , national leaders pushed
forward efforts to expand homeownership in the mid-1990s , which led the rate to rise rapidly from 1994 to 2004 , from 64 percent to a record high of 69 percent . However , as we are now seeing , the national homeownership rate has declined almost fully back to its 1994 level .
While the decline has provoked worry about homeownership access , many experts believe that the fall in the homeownership rate actually is at the tail-end of its decline and that advantageous conditions are percolating . For example , mortgage delinquency and foreclosure rates have greatly decreased , wage growth is expected to follow a period of strong job growth , and there are signs that mortgage credit conditions are improving .
It is also worth noting that the declining homeownership rate does not necessarily spell trouble for the recovery of the housing market . Researchers at Goldman Sachs noted that it is fair to interpret this lower homeownership rate as being driven by a large denominator such as more households , which indicates a positive market force , i . e ., strong housing demand . Therefore ,
Goldman Sachs research posits that the latest decline in the homeownership rate is due to the increasing number of renters rather than a decreasing number of homeowners , and that the U . S . housing recovery is ongoing with the expectation that household formation and homebuilding will normalize over the coming years .
This is bolstered by recent data on rentals : The vacancy rate in the rental market is near a 20-year low , with the homeownership rate falling as more households rent . This is evident in the large uptick in household formation over the past year , as there were 2 million more renter households and 350,000 fewer owner households , according to the Commerce Department . The 2014 fourth quarter rental vacancy rates dropped 1.2 percent from 8.2 percent in 2013 to 7 percent in 2014 , according to the Census Bureau ’ s Housing Vacancy Survey ( HVS ) data .
That being said , complications remain for the recovery of the homeownership rate due to increasing challenges associated with affordability . Rising prices and a tight supply of lower-end listings have put homes out of reach for many younger , entry-level buyers . For example , the rate of homeownership is highest for householders who are 65 and older and lowest for householders under 35 . According to analysis by the Harvard Joint Center for Housing Studies , the homeownership rate for young adults ages 25 to 34 , which rose from 45 percent in the mid-1990s to a high of 50 percent in 2004 , fell to 40 percent as of last year , representing the largest percentage decline in homeownership of any age group over the last 10 years .
Economic distress stemming from the recession certainly contributed to this decline , but new research notes that longer-term , socio-demographic changes provide a broader picture explaining the decline in homeownership among this particular demographic . “ Higher shares of minorities , lower rates of marriage and family formation , and increased focus on education and career development in the early years of adulthood have all contributed to fewer people buying homes in their 20s and early 30s ,” noted a Harvard report . Post-doctoral fellow and researcher Rachel Bogardus Drew added : “ Demographic shifts alone should have actually lowered the homeownership rates of young adults slightly below their observed 2014 level of 40 percent .” Bust to Boom ?
Article and Stats Provided By :
Marta Dinsmore , Realtor Intero Real Estate Services DinsmoreThePowerOfTwo . com 408.840.7420 DRE # 01352339
Sean Dinsmore , Realtor Intero Real Estate Services DinsmoreThePowerOfTwo . com 408.840.7327 DRE # 01966405
April 1 thru May 31 , 2015 June 1 thru July 31 , 2015
Active Listings |
48 |
46 |
Short Sale |
0 |
3 |
Bank |
1 |
1 |
Average List Price 1,054K |
$ 902K |
$ 886K |
Average days on market |
25 |
27 |
Closed Sales |
114 |
127 |
Short Sales |
8 |
3 |
Bank Owned Sales |
4 |
4 |
Average List Price |
$ 677K |
$ 763K |
Average Sales Price |
$ 681K |
$ 763K |
Average Days on Market 44 37
GILROY • MORGAN HILL • SAN MARTIN SEPTEMBER / OCTOBER 2015 gmhtoday . com
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