The nation’s homeownership rate has experienced a slight increase, both quarter-to-quarter and year-over-year, concluding the third quarter of 2017 at 63.9 percent. This rate is the highest the nation has seen since 2014, but the country still sits below the historic norm of 65 percent, according to The Wall Street Journal. Homeownership rate hit its 50-year low of 62.9 percent in the second quarter of 2016.
Unfortunately, the notion of the American Dream is presently unfeasible to many potential homebuyers by virtue of soaring prices: an inevitable result of lack of inventory, which is currently at its lowest in the west, with no shortage of demand. With less homes for sale, prices have been pushed up a whopping 48 percent nationwide from its historical low in 2011. To boot, wage growth within that same period has increased an insubstantial 15 percent.
Those facing the greatest trouble in this nationwide real estate predicament are millenials. A U.S. Census Bureau report shows that individuals under the age of 35 have the lowest homeownership rate of all generations, coming in at a mere 35.6 percent. However, this rate gradually increases with age, reaching 78.9 percent for Americans who are 65 and older.
According to the National Association of Realtor’s 2017 profile of homebuyers and sellers, first-time buyer activity has dropped to 34 percent just this year, by reason of lack of affordability. Student loans have reached a lofty average of $29,000, which NAR estimates will delay first-time homeownership by seven years.
Evidently, the current real estate landscape is daunting to prospective homebuyers. Nevertheless, those both young and old should find consolation in the fact that percentages are, indeed, increasing—in spite of the speed in which they are.
*Economic insights have been provided by Partners Trust’s Chief Economist and Vice President of Business Intelligence, Selma Hepp.