Photo: Robert Clark
Over the last couple of years, the national US homeownership rate has hovered near the all-time record low set in July 2016.
Yet, despite many Americans shifting from owning to renting in recent years, the homeownership rate edged up in the fourth quarter of 2017, according to new analysis of Census data by the listing site Zillow.
Over the last quarter, the national homeownership rate (non-seasonally adjusted) rose to 64.2 percent, up from 63.9 percent recorded the previous quarter — the highest level since the third quarter of 2014. The seasonally adjusted rate was 64 percent in the fourth quarter, up from 63.5 percent the previous year.
“The national homeownership rate finally seems to be gaining sustainable, meaningful upward momentum. The fourth quarter of 2017 was unseasonably strong, driven by buyers determined to make a deal in a highly competitive market,” writes Zillow in the digital release.
One reason the homeownership rate has slipped is the rise in the renter population.
Rentership growth outpaced homeownership in nearly all of the most populous US cities in the years between 2006 and 2016, according to a recent report. In fact, some 22 of the 100 largest US cities became renter-majority during that period, bringing the total of renter-dominated cities to 42.
“The sudden surge in the renter population is a response to the decline in the late 2000s. Economic instability generally has a negative impact on homebuying decisions and when the short-term risks of buying outweigh the long-term benefits, it tips the balance toward renting,” Balazs Szekely, real estate writer and data analyst at RentCafe, tells BuzzBuzzNews.
But recent changes to the tax code could potentially flip many renters into first-time homebuyers.
“Would-be buyers struggling to save for a down payment or figuring out how to make the monthly mortgage math pencil out, changes in the tax code that potentially might put more money in their pockets could be the push they need to move out of an apartment and into a first home,” writes Zillow.
Meantime, homebuilders could also possibly shift their focus back to a broader for-sale market in 2018, “now that rental supply is now at least somewhat more balanced to renter demand,” providing another boost to the homeownership rate.
“Assuming newly built homes are located in relatively accessible areas and are priced at a reasonable level, builders should have little trouble finding buyers for them,” according to Zillow.
Still, despite the bump in the renter population, Zillow remains optimistic that the homeownership rate will continue to grow in the coming quarters — slowly, but steadily.
Click here to read the entire release.