Thursday, March 2, 2017

Why Don't People Own Homes Like They Used To?

The homeownership rate—the percentage of households that own rather than rent the homes that they live in—has fallen sharply since mid-2005. In fact, in the second quarter of 2016 the homeownership rate fell to 62.9 percent, its lowest level since 1965.

A significant portion of the increase in the homeownership rate from the mid-1990s through 2005 occurred because of strictly demographic reasons. Over that period the population aged 45 and over grew at a 2.4 percent annually, while those aged 16 to 44 grew at only a 0.3 percent rate. Older people are more likely to establish their own household and to own the home they live in, so the end of that trend meant fewer people owning homes.

And of course, the subprime crisis started up in 2007, forcing many people out of their homes. The large volume of home foreclosures in the wake of the financial crisis and Great Recession has certainly played a role.

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