Why All the Chicken Littles Should Calm Down

The U.S. Census Bureau recently released their 2019 Q2 Homeownership Report.Some began to see the sky falling, believing the report showedAmericans may be stepping back from their belief inhomeownership.

The national homeownership rate (Americans who owned vs. rentedtheir primary residence) increased significantly during the housing boom, reaching its peak of 69.2% in 2004. The Census Bureaureported that the second quarter of 2019 ended with ahomeownership rate of 64.1%, which is down from the 64.8% rate forthe fourth quarter of 2018. Based on this news, some started toquestion the consumer’s belief in the idea of homeownershipas a major part of the American Dream.

Everyone Calm Down…

It is true the homeownership rate did fall. However, if you lookat the national rate over the last 35 years (1984-2019), you cansee that the current homeownership rate has returned to historicalnorms. The 64.1% rate is equivalent to the rates in 1984 and1994.

What Will The Future Bring?

Part of the reason the homeownership rate slipped is a lack ofinventory available for purchase for first-time home buyers. Thedemand is there, but currently, the supply is not. It seems,however, that is about to change.

In a recent report, Ivy Zelman explained that builders havefinally started to increase the number of homes they’reconstructing at the lower-end price points:

“Robust growth in the entry-level price point of lateshould translate to a reacceleration in homeownership rates movingforward.”

Bottom Line

Today, the homeownership rate sits at historic norms. In allprobability, it will increase as more inventory becomes available.There is no reason for concern.