by Mitch Kokai
Senior Political Analyst, John Locke Foundation
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.