Homeownership rate drops to 63.4%, lowest since 1967
The U.S. homeownership rate fell to 63.4 percent in the second quarter of 2015, according to the U.S. Census. That is down from 63.7 percent in the first quarter and from 64.7 percent in the same quarter of 2014. It marks the lowest homeownership rate since 1967.
Homeownership peaked at 69.2 percent at the end of 2004, when the housing market was in the midst of an epic boom. The 50-year average is 65.3 percent.
“It is now just five-tenths from the record low seen in 1965 in data going back also to 1965,” noted Peter Boockvar, an analyst with The Lindsey Group. “All the governmental attempts (certainly aided and abetted by many players in the private sector) at boosting homeownership has gotten us to this point in time with all the havoc it wreaked over the past 10 years. It’s just another governmental lesson never learned, of don’t mess with the free market and human nature.”
Household formation, however, is rising. The number of occupied housing units grew, but all on the renter side. The number of owner-occupied units fell from a year ago. No wonder both rents and occupancies continue to soar.
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“Our results for the second quarter and year to date exceeded our original outlook,” noted Tim Naughton, chairman and CEO of AvalonBay, one of the nation’s largest apartment REITs, in the company’s second-quarter earnings release out Monday. “For the balance of the year, we expect accelerating apartment demand to support stronger performance across our business.”
Multifamily apartment starts soared 55 percent in June from June of 2014, according to the U.S. Census. This, as single-family housing starts rose 15 percent. Apartment supply is still far lower than demand. Annual rent growth hit 5 percent in the second quarter of this year, according to Axiometrics, a real estate analytics company. Apartment occupancy hit 95.2 percent, a near record high.
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Home sales have been increasing modestly this year, but first-time buyers are still playing a historically small part in the market. Still-rising home prices and tight lending standards are keeping these buyers on the sidelines. Home prices in some markets are hitting new highs and prices are gaining the most on the low end of the market, where first-time buyers mostly start.