While the Census Bureau has noted the decline
in homeownership over the last few years, the latest edition of Fannie Mae's Housing Insights looks inside the
figures. Fannie Mae's economists found
that the decline in the homeownership rate over the last four years has been
particularly pronounced for young households and that single-family rental
housing, with its high average rates, has absorbed a disproportionate share of
new rental demand.
Five years after the start of the
housing bust American households continue to shift from homeownership to being
renters. In 2011 the homeownership rate
fell by 1 percent, the fourth consecutive annual decline and is now 64.6
percent compared to 67.2 percent in 2007.
This is the lowest rate recorded by the Census Bureau's American
Community Survey (ACS) since it began in 2005.
Every age group except the 75 plus group
experienced a decrease in homeownership in 2010 and 2011 and the two younger demographic
groups which span ages 25 to 44 led the drop both in the recent year and the
last four years. These two groups have
experienced declines more than twice the drop in the overall rate.
The ACS shows that single family housing
has picked up much of the growing rental market. Single family detached units accounted for 27.9
percent of occupied rental stock in 2011, up 0.5 percentage points since 2010
and 2.0 percentage points since 2007.
Some renters are former homeowners displaced by foreclosure. As the market share of single-family homes
increased, small multi-family buildings lost share even thought they have
average rents at least $100 per month less than the single family units.
Previous research has shown that renter
income growth lagged substantially behind rent gains between 2008 and 2010 and
thus a larger proportion of renters have assumed housing costs that exceed the
affordability level of 30 percent. At
the same time the proportion of homeowners with affordability problems has remained
flat. The 2010 ACS revealed further
divergence in affordability between renters and owners. The proportion of renters paying at least 30
percent of their income for housing increased between 2010 and 2011 although
not as fast as in preceding years while the percentage of homeowners with
affordability problems decreased by nearly a percentage point as mortgage
interest rates declined to record lows.
Taken together, the proportion of all households with affordability
issues declined slightly between 2010 and 2011.
Again it is younger households that are
bearing the brunt of these changes.
Between 2007 and 2011 the share of renters under the age of 25 with
housing costs burdens increased by 6.2 percentage points and that for renters
25 to 35 went up 4 points. Homeowners in
these same two age groups had fewer affordability problem and the two groups
combined had affordability problems at a rate lower than in 2005. This large decline among homeowners was not
enough to offset the increases among the rental population so there was an
increase in the share of all households in those age groups with affordability issues.
One encouraging finding for renters is
that affordability problems did not worsen in 2011 for occupants of single
family rentals or apartment buildings with at least 50 units, the fastest
growing rental market segments. After
rising in 2009 and 2010, housing cost burdens for occupants of these housing
types were flat in 2011.