Amercia’s homeownership rate has been falling for eight years, down to 63.7 per cent in 1Q this year from a peak of over 69 per cent in 2004, according to a new report released by Harvard University’s Joint Center for Housing Studies, said the New York Times Wednesday.
The flip side of the decline in homeownership is a boom in rentals and a significant rise in the cost of renting. On average, the number of new rental households has increased by 770,000 annually since 2004, the center’s report said, making 2004-14 the strongest 10-year stretch of rental growth since the late 1980s.
US Homeownership Rates
Even as the housing market continues to improve — sales of existing homes in May increased to their highest pace in six years, the National Association of Realtors reported on Monday, and first-timers make up 32 per cent of the buyers — it is leaving millions of Americans unwillingly stuck in rental housing, said the NYT.
According to the housing center’s report, the share of renters paying more than 30 per cent of their income on rent — defined as “cost burdened” — has held at near-record highs. In 2013, almost half of all renters fell into that category. The share of cost-burdened renters is growing among people with moderate incomes, those who earn from US$30,000 to US$75,000 a year, the report said.
The flood of renters has reduced the national vacancy rate to its lowest point in nearly 20 years, according to the center’s report. And while builders are adding apartments rapidly, they are concentrating on the higher end of the market, pinching those in the middle and bottom. Last year, rents rose at a 3.2 per cent rate, more than twice the pace of overall inflation.