by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Gene Epstein of Barron’s uses his latest “Economic Beat” column to delve into the latest developments in American homeownership.
The share of households that own the home they live in should be making a comeback after a long slide. The ownership rate probably hit bottom last year, beginning a slow recovery that will boost economic growth.
Back in mid-2010, poor prospects for the economic expansion led me to predict that the ownership rate, then nearly 67%, would slip to 64% by 2015 (“Renter Nation,” July 24, 2010). My projection proved a tad too high. The Census Bureau has reported that in 2015, 63.7% of U.S. households lived in a home they owned, a 48-year low. That put the share of households renting at a 48-year high of 36.3%.
Ironically, when President Bill Clinton launched his National Homeownership Strategy in 1995—a torch enthusiastically taken up by his successor—the rate of ownership was 64.8%. After rising above 69% by the mid-2000s, it is now lower than it was when the 1995 effort began.
But with favorable fundamentals—rising wage and salary income, low mortgage interest rates, and still-affordable prices resulting in a healthy housing-affordability ratio—ownership should start climbing for the first time in more than a decade. …
… More sales tend to spur more single-family housing starts. Starts of both single and multifamily structures have climbed from a little more than an annualized 600,000 units in 2011 to 1.1 million over the past 12 months. While starts will certainly remain far below the more-than-two-million pace of mid-2000, a climb toward 1.5 million is quite possible. And over the past several years, apartments have accounted for a larger-than-normal share of starts, to serve the rental market. With a rise in ownership, there should be a shift back to starts of detached homes, further spurring economic growth.