Today’s 63.7% US homeownership rate* (down from 69.1% 12 years ago) is propped up by a very high homeownership rate for those aged 65+ who bought their homes many years ago. They benefited from a strong economy, more affordable housing during their working years (even adjusting for mortgage rates and inflation), and 100% down payment programs for veterans.
Not surprisingly, the percentage of households who own their home rises as incomes rise, as shown in the chart below. For those executives who have to forecast housing demand, and homeownership demand in particular, note that the median-income household (after taking out retirees) makes about $64,000 per year, and only 58% of those households own a home. This will drive homeownership down over time.
Low incomes are just one of many reasons why we forecast homeownership to fall below 61% by 2025. The 80%+/- homeownership rate of those who pass away over the next eight years will be the biggest drag on homeownership. As we note in our book, the Four Big Influencers (government policies, the economy, new technologies, and shifts in societal preferences) could impact this forecast positively or negatively. We monitor all four influencers very carefully to help executives plan their business decisions.
*Homeownership rates as reported by the U.S. Census Bureau’s Housing Vacancies and Homeownership Survey. We do not believe that the recent rise in the homeownership rate is correct, as it was driven partially by the Census Bureau reporting an increase of only 558,000 occupied housing units in the last year, which is far too low.