The nationwide homeownership rate during the first quarter of 2011 was 66%, down from 67% one year ago and the lowest it has been since the fourth quarter of 1998. Homeownership has declined:
- 5% for individuals under 35;
- 5% for individuals 35 to 44;
- 4% for individuals 45 to 54;
- 3% for individuals 55 to 64; and
- 0% for individuals over 65.
The total number of homeowners nationally is down 300,000 from the first quarter of 2010, and currently at 75 million. California’s population is approximately 13% of the national population, and the state homeownership rate in 2010 was 56%, down from 60% in 2006.
The national rental vacancy rate for the first quarter of 2011 is at 10%, up from 9% in 4Q 2010, and down from 11% one year prior.
The total number of renters nationally is up by one million from the prior one-year period, and currently at 38 million.
first tuesday take: According to the data, brokers and agents will have more luck selling homes to individuals aged over 45. Agents looking to sell to Generation Y (Gen Y), those born in the 1980s and 1990s, must take their financial situation into account when interviewing prospective buyers.
Gen Y’s visions of owning the All-American dream home have been stifled by perpetually low employment rates. The current unhealthy economic conditions have hindered their ability to generate a mortgage downpayment and inhibited them from forming a household.
These young adults are also heavily burdened by student loan debt. Their lack of experience in the work force due to limited job opportunities and longer time spent on their education is dampening their ability to finance the repayment of their education, let alone the purchase of a home. [For more information regarding California employment, see the April 2011 first tuesday Market Chart, Jobs Move Real Estate; for more information regarding homeownership demographics, see the October 2010 first tuesday article, The demographics forging California’s real estate market: a study of forthcoming trends and opportunities – Part I and Part II.]
Additionally, increased consumer protection regulations are restoring mortgage lending fundamentals and forcing lenders to make the process of obtaining mortgage financing intimidating for first-time homebuyers. [For more information regarding consumer protection, see the October 2010 first tuesday Legislative Watch, TILA circa 2010; consumer protection enhancement and the January 2011 first tuesday article, Homebuyers will see stricter lending policies in 2011.]
Yet, the majority of Americans still refuse to give up on homeownership, even with a slow economy, high unemployment and knowledge that home values can go down. 80% of Americans believe it is important they buy a home one day, 90% say they would buy their current homes again and 70% would advise their family and friends to purchase a home as a valuable long-term investment.
More than 70% of Gen Y expect to own a home before they turn 30. The will to own remains in spite of the present inability. Now it is up to brokers and agents to ferret out those that are ready to negotiate the purchase of their first home – before the builders get to them. [For more information regarding homeownership, see the April 2011 first tuesday article, Americans dream for a home on unstable ground and the November 2010 first tuesday article, Generation Y is still chasing their dream of homeownership.]
Once California’s employment rate is fully corrected (likely during 2016), Californians — particularly the young — will be waiting with open arms to welcome homeownership back into their lives. Brokers and agents need to position themselves for the rush that will follow.
Re: “Homeownership declines hitting younger households hardest” from Eye on Housing
