This Week's Forecasts & Trends E-Letter
"Renter Nation" - US Homeownership Hits 48-Year Low
August 4, 2015
The government’s Census Bureau reported last week that the US homeownership rate fell to the lowest level in the last 48 years. It is indeed a sad awakening that the level of home ownership is now the lowest since 1967.
Along this same line, the Census Bureau found that more Millennials (18 to 34 year-olds) are living with their parents today than at the worst point in the Great Recession. This is despite the fact that the economy and labor market conditions have improved in recent years.
The issue is not that we aren’t forming more households. We are. The problem is that fewer and fewer households can afford to buy a house – despite record low interest rates – and more and more are renting rather than buying, whether by choice or by necessity.
The fact that more and more Americans are choosing to rent their homes and apartments has resulted in rents going through the roof. It’s supply and demand, of course. But the fact that Americans are spending more and more on rent means that they have less and less to spend on buying other goods and services to spur the economy.
The bottom line is that the American Dream of owning your own home is fading fast. This fact is affecting younger Americans the hardest. Way too many have given up the dream of owning their own home, as a recent Gallup poll has found.
Today, we’ll look at this disturbing trend and try to discern why it is happening.