The homeownership rate across the United States fell to 63.7% in the first quarter of 2015. Interestingly, household formation saw a large pick up over the same time period.
Homeownership rates peaked in 2004 at 69.4 percent. Although lower than 2004 numbers, current figures are not too far off the average rate through the 1990’s—64.9 percent.
Homeownership rate for individuals under 35 years old declined by 1.6% and 4.4% since the first quarter of 2014. Those aged 35-44 saw their homeownership rate drop by 2.3 percent.
However, the count of new household formations jumped 1.34 million for the final quarter of 2014 and the annual gain for 2015 is expected to be around 1.5 million. Both are extremely good news for buyer demand for homes.
Quarter 1 of 2015 gave back some of these gains in household formation. So far, its estimated that 407,000 households were lost but compared with Quarter 4 gains from 2014, it has only given back a piece of what had been gained. Most of the rise can be attributed to renters, who continue to struggle with high prices and low vacancies. They have provided a major boost to the multi-family segment of the housing market over the last year.
Many experts hope to see the homeownership rate stabilize based on an improving labor market and low mortgage requirements for first-time homebuyers. Whether that will occur, is yet to be seen.
Hart Real Estate Solutions