The State of Homeownership
Achieving the American Dream
First American Chief Economist Mark Fleming offers expert insight into the economic and cultural trends driving homeownership.
Homeownership continues to be the foundation of the pursuit of the American Dream. It is a critical driver of economic mobility, delivering financial and social advantages to families and entire communities.
In this era of dramatic economic, technological and societal change, understanding the state of homeownership today and what trends will influence homeownership in the future can help inform the discussions necessary to preserve homeownership opportunities for the next generation.
First American Chief Economist Mark Fleming is passionate about homeownership and its broad impact, and frequently analyzes and reports on the economic and cultural trends that are shaping homeownership. From presentations to policymakers and business leaders to data-driven white papers and research, this resource page provides an in-depth view of homeownership from the perspective of one of the most respected voices in the mortgage and real estate industry.
Watch highlights from First American's Leadership Forum discussion on Capitol Hill.
Homeownership Rate at a Generational Low
Homeownership until the 1990's remained a consistently within the 63-65 percent range. Then, in the 1990's, through a variety of ways (regulatory, policy, financial, and demographic), homeownership rose dramatically. This was partly driven by baby-boomers aging into prime homeownership years, financial innovation, and policies to encourage homeownership. The recent decline has been largely economically driven, but also partly because young households are forming primarily as renters and driving down the share of household homeowners relative to the total. Not all of the decline is because of the housing crisis of 2009.
Minority-Majority by 2045
Demographic projections anticipate that, by 2045, the collective minority will be the majority. The concern is homeownership will suffer because these ethnicities have lower homeownership rates. What this fails to consider is the age profile of the different ethnic groups, which tends to be much younger and suggests a likely increase in the home buying population within these ethnic groups.
Aging Settles You Down
There is a clear relationship between age and the homeownership rate that is consistent across ethnicity. Age is an effective proxy for lifestyle decisions, such as marriage and having children, as well as economic and educational attainment, all of which increase the ability to both afford and desire to own a home. As households age, they are more likely to be married and have children, have attained higher education levels and earn more income. The homeownership rate increases until approximately the age of 55 for all ethnicities, all achieving homeownership rates above 60 percent by the age of 60, yet significant gaps remain — particularly between non-Hispanic Whites, African-Americans, and Hispanics.
Minorities Projected to Drive Future Homeownership Growth
Based on the propensity for homeownership by age and ethnicity combined with Census forecasts of population by age and ethnicity, it's possible to estimate homeownership rates by ethnicity. Census forecasts of population by age and ethnicity are converted into the number of households using headship rates (the number of households per person) from the 2013 American Communities Survey (ACS). This forecast assumes that household formation rates within an age/ethnicity cohort are constant. In other words, 25-30 year-old Hispanics will form households 20 years from now at the same rate as 25-30 year-old Hispanics did in 2013. This forecast will be influenced by our efforts to close the homeownership ethnicity gaps and find innovative ways to serve the households of the future.
"Homeownership is a part, if not the beginning, of the achievement of the American Dream."
Rep. Emanuel Cleaver
"Homeownership is the first rung on the ladder of wealth creation in our nation."
Rep. Loretta Sanchez
"Hispanic Millennials, or 'Hispannials,' are buying homes at more rapid pace than non-Latinos."
"We want to widen the criteria used to identify successful homeowners of the future."
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