New Tenure Data Shows a Change in Homeownership Trends
The latest update to our on-going report on housing tenure trends shows a reversal of the recent pattern of rising ownership and declining rentership. For the first time since the end of the housing downturn, the national homeownership rate declined by 0.3 percentage points to 64.3 percentage in Q1 2019, while the share of renting households increased to 35.7 percent. Both shares are equal to their Q1 2018 values, but remain more than a full percentage point from their long-run (1980-2018) averages of 65.6 percent homeowners and 34.4 percent renters.
The report is based on data from the U.S. Census Bureau’s Q4 2018 Housing Vacancy Survey (HVS), which includes details on tenure trends by age, race, and income. Disaggregating the national tenure rates by these groups helps reveal divergent patterns among some subsets of U.S. households, notably between non-Hispanic White and Black households, whose tenure rate gap widened further last quarter to a new record-high of 32 percentage points.
Tenure Trends by Race Show Divergence among Minority Groups
The expanding Black-White tenure gap reflects a continued decline in homeownership among Black households, whose owning share fell to 41.1 percent in the first quarter of this year – a new low point among this group for the 25-year HVS series. Recent studies have pointed to this decline as a contributor to their growing racial wealth gap relative to White households.
The tenure trends observed among Black households are not reflected in other minority groups, however. The homeownership rate among Hispanics has been steadily rising, including in the first quarter this year. At 47.4 percent, the share of homeowning Hispanic households has increased by over two percentage points in the last five years, outpacing all other racial/ethnic subsets. Asian and other non-White households, meanwhile, saw their upward trend in homeownership rates end in Q1 2019, though their share of owning households remains above that of other minority groups.
Homeownership Stalls Among Younger Households
For the last few years, rising homeownership rates among younger households (under age 35) have suggested the Millennial generation was finally making the switch from renting to buying their own homes. Indeed, this cohort had the largest growth of any age group in their ownership shares between 2016 and 2018. The Q1 2019 data, however, show a notable increase in rentership rates among young households, who still outnumber young homeowners almost 2-to-1.
At the other end of the tenure spectrum, shares of seniors owning and renting appear to have stabilized recently, after slight increases in rentership rates toward the end of the housing downturn. At nearly 80 percent homeowners, many over 65-year-old households may be planning to age in place in their owned homes, which could increase demand for home remodeling and retrofitting services to adapt their residences to their changing needs.
Tenure Gaps Narrow by Income, Though Renting Remains Vital to Many
Among the leaders in the recent increase in homeownership rates has been households below the median family income. Their ownership rate grew by 1.5 percentage points after the end of the housing downturn and continued to rise even as the national rate dipped in the first quarter of this year. This trend has helped reduce their tenure rate gap with above median incomes to a new low of 27.5 percentage points.
Despite their homeownership gains, about half of all below-median income households still rent their home. As with younger and minority households, ensuring that a sufficient supply of affordable rental units remains available to them will be key to their long-term prospects for housing stability and economic opportunity.
Owning and Renting Both Vital to Increasing Opportunity
Often lost in comparisons of homeownership and renting is the crucial role each plays in fostering economic mobility and access to opportunity for millions of households. On the one hand, wide gaps in homeownership rates among groups contribute to unequal distributions of wealth that compound over time. On the other, demand for affordable rentals continues to outstrip supply, leaving many households to sacrifice other needs to pay for housing.
These issues are especially acute in markets where employment often outpaces housing growth and high housing costs force many to choose long commutes to less expensive homes, adding to already critical levels of congestion and environmental damage.
To address these issues requires innovation, bold moves, and a holistic view of housing not just as owning and renting, but as a vital element in fostering individual and community success.
At Enterprise, we see housing as the key to improving opportunity in low-income communities, regardless of tenure. Through well-designed development that includes access to health care, education, transit, and jobs, all people can benefit from better and more affordable housing options.