America is in the midst of a home buying frenzy driven by some of the lowest interest rates on record and a supply of homes for sale that lags behind demand. There is also the lingering effect of the pandemic: many people want to continue working from home, which increases the need for more living space in larger homes, while interest in life in the suburbs increases. and beyond grows.
On top of that, many people still have the American dream of owning a home – whether it’s a yard with a palisade or a balcony with metal railings – as an investment that creates wealth and a sense of commitment to home and community.
Homeownership growth is now in the hands – and pockets – of millennials
Even with affordability and limited supply of who can spend how much and where, research shows that homeownership rates have increased.
“To some extent (…) interest in homeownership has followed a fairly steady upward trajectory for several years as the post-recession economy improves,” says a new report from Filterbuy titled “Cities with the highest (and lowest) homeownership rates.”
Homeownership rates rose from around 65% in 1980 to just over 69% in 2005, then fell after the housing crisis to around 63% in 2015. They have now risen to just under 66%, according to US Census data analyzed by Filter Buy.
One of the main drivers is demographics: this huge cohort of millennials – people between the ages of 26 and 40 – left behind the scars of adulthood during the Great Recession and are now in a financial position to found. a family and buy houses.
So where does this generation of buyers choose to set up a home and a home?
Homeownership rates are rising even in lower ranked markets
Using data from the Census Bureau, the US Bureau of Economic Analysis and Zillow, Filterbuy looked at the 75 largest real estate markets in the country. Analysis of the numbers put Cape Coral-Fort Myers in southwest Florida in the lead, with a homeownership rate of 77.4% in 2020, up 10.9 percentage points. percentage since 2016. The Birmingham-Hoover market, Alabama’s largest metropolitan area, was in second, at 76%. up 7.3 percentage points since 2016.
The lowest homeownership rates were found in high-priced, heavily urban markets in San Francisco, Los Angeles, New York, and Honolulu and surrounding areas, markets where housing is expensive and renting is more common. . At the bottom of the heap was the Los Angeles-Long Beach-Anaheim market with 48.5% home ownership, which was actually up 1.4 percentage points from 2016. Just behind that is found New York-Newark at 50.9 percent, up half a percentage point in four. years.
Generational and ethnic differences
There are still large generational and ethnic differences in homeownership rates. Filterbuy research found a very clear demarcation here: Ownership was 39.1% for people under 35 but 62.7% for the next group, those aged 35 to 44. The rates then increase with age, up to 80% for Americans 65 and older.
But it’s not just young people who are lagging behind in homeownership rates. “Other demographic groups have struggled,” the report says. For example, Hispanic / Latino and Black Americans have homeownership rates of 50.1% and 45.1%, respectively. This compares to a rate of over 75% for non-Hispanic white Americans.
Homeownership has long been a way to build personal wealth, as well as education and income opportunities, which can then be passed on to the next generation. Then there is the reverse effect: the inability to afford or not have access to homeownership can limit that ability to improve financial health through the power of this passive investment.
But beyond that, whether it’s buying a home to occupy, rent, or sell quickly, a glance at this kind of data can help inform any decision.