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The Changing Demographics of Homeownership

Daniel McCue

October 20, 2014

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Homeownership Remains Under Pressure

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Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys.

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Stability Among Older Households Have Prevented an Even Larger Fall-off in the National Homeownership Rate

Source: JCHS tabulations of US Census Bureau, Housing Vacancy Survey.

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Homeownership Rate Declines Have Been Uneven Across Household Types

Source: JCHS tabulations of US Census Bureau, Current Population Surveys.

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Homeownership Rate Declines Have Also Been Steeper for Minorities

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Notes: White, black and Asian/other households are non-Hispanic. Hispanic households can be of any race.

Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys.

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Disproportionate Drops by Race/Ethnicity Have Reversed Gains Made in Reducing Homeownership Rate Gaps Between Whites and Minorities

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Notes: White and black households are non-Hispanic. Hispanic households may be of any race.

Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys.

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Minorities Will Account for Three-Quarters of Household Growth Over the Coming Decade

Note: White, black, and Asian/other households are non-Hispanic. Hispanic households may be of any race.

Sources: JCHS tabulations of US Census Bureau, 2012 American Community Survey; JCHS 2013 middle-series household projections.

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The Older Population Is on Track to Increase Dramatically

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Source: US Census Bureau, Decennial Censuses and 2012 National Population Projections (middle series).

Population by Age Group (Millions)

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By Age 80, Adults Are Far More Likely to Have Disabilities than to Live in Accessible Homes

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Notes: Accessibility features specifically include no-step entry, single-floor living, extra-wide hallways and doors, accessible electrical controls and switches, and lever-style handles on doors and faucets. Disabilities include hearing, vision, cognitive, mobility, self-care, and independent living difficulties. Data include only occupied housing units.

Source: JCHS tabulations of US Department of Housing and Urban Development, 2011 American Housing Survey, and US Census Bureau, 2012 American Community Survey.

Shares of Housing Units and Population with Disabilities by Age Group (Percent)

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Trends Behind the Trends

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The Rise and Fall in Homeownership Among Younger Households Mirrors Income Trends

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Note: Incomes are adjusted for inflation by the CPI-U for All Items.

Source: JCHS tabulations of US Census Bureau, Housing Vacancy Surveys and Current Population Surveys.

25–34 Year Olds 35–44 Year Olds

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White-Minority Income Gaps Have Increased for All but the Oldest Age Group

Source: JCHS tabulations of US Census Bureau, Current Population Surveys.

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Renter Incomes Have Not Kept Up with Housing Costs

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Percent Change in Median Value Since 2001

Notes: Values are adjusted for inflation by the CPI-U for All Items. Data exclude renters paying no cash rent.Source: JCHS tabulations of US Census Bureau, American Community Surveys.

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The Share of Renters with Affordability Problems Has Doubled in the Last 50 Years

Notes: Rent includes tenant-paid utilities. Moderately (severely) cost-burdened renters pay 30-50% (more than 50%) of pre-tax household income for housing. Renters with zero or negative income are assumed to be severely burdened, while renters not paying cash rent are assumed to be unburdened.

Source: JCHS tabulations of US Census Bureau, 1960-2000 Decennial Censuses and 2010 American Community Survey.

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Student Loans Have Driven Up Consumer Debt Burdens

Notes: All other consumer debt includes credit card debt, auto loans, retail loans, and personal loans. Annual balances are averages of quarterly data.Source: Federal Reserve Bank of New York, Quarterly Report on Household Debt and Credit, February 2014.

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Financing Constraints Weigh Heavily on Potential Homebuyers

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Percent of Respondents

Source: Fannie Mae National Housing Survey, 2011:Q3.

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Minority and Low-Income Households Are Much More Likely to Be Denied Mortgages

Source: JCHS tabulations of 2011 Home Mortgage Disclosure Act data.

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Access to Credit Has Lagged for Minorities and Lower-Income Borrowers

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Change in First-Lien Loans, 2011–12 (Percent)

Notes: White borrowers are non-Hispanic. Hispanic borrowers include only white borrowers of Hispanic origin. Asian/other includes American Indians, Alaska natives, and native Hawaiians and other Pacific Islanders. Data include only first-lien loans to owner-occupants for one- to four-unit properties. Low- (moderate- /middle- / high-) income borrowers have household incomes below 50% (50–79% / 80–119% / 120% or more) of area medians. Source: Neil Bhutta and Glenn B. Canner, Mortgage Market Conditions and Borrower Outcomes: Evidence from the 2012 HMDA Data and Matched HMDA-Credit Record Data, Federal Reserve Bulletin, November 2013.

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Median Housing Wealth as a Share of Household Net Worth (Percent)

Notes: Data exclude renters and households with zero or negative income. Income quartiles are equal fourths of all households ranked by income. White, black and other households are non-Hispanic; Hispanic households can be of any race.Source: JCHS tabulations of Federal Reserve Board, 2010 Survey of Consumer Finances.

Housing is the Major Form of Wealth for Low-Income and Minority Households

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While Maybe not for their Next Home, the Large Majority of Young Renters Plan to Buy a Home Sometime in the Future

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Source: Fannie Mae National Housing Survey, 2013 Q4. http://www.fanniemae.com/resources/file/research/housingsurvey/pdf/nhsmay2014presentation.pdf

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Final Points

• Homeownership declines have been widespread, but suffered disproportionately across key demographic groups.

• Millennials (born 1985-2004) in their 20’s, are the major source of new demand.

• They are the largest and most diverse generation ever:– 85-86 million in 2012, relative to 77-78 million baby

boomers at similar age in 1972.– Already responsible for 16 million households, will be

40 million by 2025.• Most (nearly all) expect to buy a home in the future, just

maybe not their next home.

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