Puzzling out the many parts to the decline in homeownership
Trulia, the real estate search engine, does some interesting studies off the news. One of the latest focused on homeownership, and the fact that the percentage of American adults owning houses has fallen to a 51-year low.
Trulia, the real estate search engine, does some interesting studies off the news. One of the latest focused on homeownership, and the fact that the percentage of American adults owning houses has fallen to a 51-year low.
The reasons for the decline to 62.9 percent homeownership, from about 70 percent during the housing boom of the early 2000s, are easy to understand.
The bursting of the housing bubble in, depending on your location, 2006 to 2008 soured many Americans on homeownership.
Between 2007 and 2011, the number of foreclosure filings was almost quadruple what RealtyTrac, the real estate information company that tracks distressed properties, sees as average for the country as a whole - 500,000 a year.
Too many people paid too much for houses they couldn't afford anyway, thanks to lax underwriting standards under the apparently unwatchful eyes of federal regulators.
Over the last decade, I reported it all. Just Google my name and "foreclosure," and then take a month to read what I wrote about it.
Trulia housing data analyst Felipe Chacon said one part of the homeownership puzzle is the effect of family influences on home-buying.
"We examined more than four decades of data from the University of Michigan's Panel Study of Income Dynamics and found that in at least one way, kids actually do listen to their parents," he said.
"Children raised in homes their parents owned, rather than rented, were nearly three times as likely to buy a home themselves," Chacon said.
It is also a trend that persists as those children get older and make more money, he said.
There is a 79 percent chance that someone who is 40, has a household income of $100,000 annually and grew up in a family-owned home will become a homeowner, compared with a 56 percent chance for someone whose parents rented, he said.
Enter the millennials.
Compared with Gen Xers, millennials are less likely than people of other age groups to have grown up in homes owned by their parents.
"This suggests that millennials could be less likely to own a home when they reach prime home-buying age even before considering student debt burdens and lower wages for those who hit the labor market during the recession," he said.
For those millennials who have just bought $400,000 townhouses in Fishtown, Chacon is not referring to you. (Notice he uses words such as could and likely.)
I have said it before, but I spent several years between 1997 and 2005 hearing the experts tell us that all baby boomers were rich and wanted to downsize to 4,000-square-foot houses in clusters with other baby boomers.
The reality, of course, is that most of the baby-boomer email I receive begs me to steer them to single-story ranchers near supermarkets and hospitals.
To be sure, homeownership is not without financial risks and is not the only way to store and generate wealth, Chacon said. Nor is it even the best.
"In a world of limitless ways to spend money, though, homeownership has remained a reliable means of forced savings, even during the tumultuous past decade," he observed.
Limitless ways to spend money. That struck a chord.
At the start of 2015, while trying to discern the truth about millennial attitudes, I interviewed five buyers. One did say his friends had a hard time saving for a home because there was so much new technology to buy.
An Apple a day takes on a new meaning, I guess.
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