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Despite housing downturn, home ownership edges up

AP

The data paint a picture of declining homeownership rates for younger and middle-aged Americans, with sustained ownership rates among older adults.

 

By Jane Hodges, contributor

Despite a historic downturn in housing, the ranks of homeowners grew between the second and third quarter.

The American homeownership rate rose slightly to 66.3 during third quarter 2011, up from 65.9 percent in second quarter, according to data released today by the U.S. Census Bureau. Rental vacancy nationally was 9.8 percent during the quarter, down from 10.3 percent this time last year but up from 9.2 percent in second quarter. Rental vacancy hit a recent-year peak of 11.1 percent during third quarter 2009, according to the data. 

"These are two unexpected changes," said John McIlwain, a senior fellow for housing at the Urban Land Institute, who as recently as two weeks ago was predicting a further decline in homeownership to 65.7 percent. "I'm not used to being proved wrong."

Homeownership peaked in the U.S. during 2004, at around 69 percent, and has shown gradual declines since that time due to the housing and foreclosure crisis and a soft economy. But McIlwain and other industry observers, such as Greg Willett, vice president of apartment research firm MPF Research, both predict homeownership will gradually fall to between 62 percent and 64 percent.

The data paint a picture of declining homeownership rates for younger and middle-aged Americans, with sustained ownership rates among older adults. Homeownership has dropped most substantially among the young and middle-aged: The homeownership rate among under-35 buyers is now at 38 percent, versus 42 percent in 2007.  During third quarter 2011, adults ages 35 to 44 had a 63.4 percent homeownership rate, down from 65.2 percent this time last year and 70.1 percent in 2005. Adults in the 45 to 54 year old age range had a 72.7 percent homeownership rate, down slightly from 73 percent this time last year and from 76.7 percent in third quarter 2005.

To McIlwain, these numbers reinforce his prediction that in the future those who buy will wait longer to buy, until their late 30s or even early 40s, and then remain homeowners into their older years as prior generations have.

"We continue to have the aspiration for homeownership, but it'll take longer for future buyers," he says.

Homeownership is highest in the Midwest (70.3 percent) and South (68.4 percent), but lower in the Northeast (63.7 percent) and West (60.7 percent).

Vacancy abounds

Some 85.8 percent of American housing is occupied, with 56.9 percent of that property owned and 28.9 percent rented. Among the 14.2 percent of properties vacant, 3.2 percent are for rent, 1.4 percent are for sale, 0.9 percent are temporarily vacant (sold or leased but with tenants or owners not yet living there), and 5.4 percent of properties are currently "held off market" due to their status as a non-primary residence (2.5 percent) or for other reasons (2.9 percent).

Rental vacancy was down slightly year-over-year within metropolitan statistical areas (to 9.8 percent, from 10.3 percent during the year prior), little-changed in "principal cities," and declining in the suburbs where it was 9.1 percent during third quarter 2011, down from 10.1 percent in the same quarter last year. The census noted that none of these changes were "statistically significant." Vacancy was highest in the South (12.2 percent) and Midwest (10.5 percent), but lower in the Northeast (8 percent) and West (7.3 percent).

Top towns for rental vacancy (by metropolitan statistical area)

  • Houston/Baytown/Sugarland, Texas: 17.1 percent
  • Tucson, Ariz.: 17 percent
  • Poughkeepsie, NY: 17 percent
  • Orlando, Fla.: 16.6 percent
  • Greensboro/High Point, NC: 16.3 percent
  • Kansas City, Mo.: 15.2 percent
  • Detroit/Warren/Livonia, Mich.: 14.9 percent
  • Memphis, Tenn.: 14.8 percent
  • Charlotte/Gastonia/Concord, NC: 14.6 percent
  • Indianapolis, Ind.: 14.5 percent

Top towns for owned-home vacancy (by metropolitan statistical area)

Vacancy among owned homes was 2.4 percent during the quarter, and has been below 3 percent nationally for several years now. Nonetheless, some metro area showed high vacancy rates among owned homes.

       Top towns for vacant owned homes (by metropolitan statistical area)

  • Dayton, Ohio: 6.5 percent
  • Columbia, SC: 5.1 percent
  • Las Vegas/Paradise, Nev.: 4.9 percent
  • Atlanta/Sandy Springs/Marietta, Ga.: 4.6 percent
  • Poughkeepsie/Newburgh, NY/Middletown, NJ: 4.6 percent
  • Richmond, Va.: 4 percent
  • Tampa-St. Petersburg/Clearwater, Fla.: 3.8 percent
  • Grand Rapids, Wyo. & Mich.: 3.8 percent
  • Virginia Beach/Norfolk/Newport News, Va.: 3.7 percent
  • Chicago/Naperville/Joliet, Ill.: 3.1 percent