Big D Real Estate News: Is the Dream of Home Ownership Dying?

Last Thursday, the Census Bureau released 2010 figures indicating that American home ownership is as low as it was during the Great Depression.

Last year, the U.S. homeownership rate fell to 65.1 percent last year. And analysts are concerned it may never return to the 2005 to 2006 housing boom peak in which nearly 70 percent of Americans owned their own homes.

There are the economic realities that came about in 2008: tighter credit, high unemployment, and considerably less help from the government. In fact, some might say that the government now is doing all it can to de-incentivize home ownership. It really is very similar to the 1930’s and 1940’s, when young adults moved in with their parents because they either did not have jobs or had spouses at war. Home ownership rates are at their lowest for middle-aged adults, aged 35 to 64, many of whom either have homes underwater or have turned the keys over in foreclosure or bankruptcy.

Here’s a disturbing trend: the homeownership gap between whites and blacks is now at its widest since 1960, wiping out more than 40 years of gains.

The market crashed, and attitudes toward housing are leaning to renting, rather than buying. Many experts say the younger generation is a Renter Nation who will eschew ownership of everything, from homes to autos, maybe even clothes. And as populations migrate to more urban environments, who needs to own a home that will tie you down, and really then, who needs a car?

The Obama administration earlier this year said it would move from promoting homeownership for all and steer people with low incomes toward renting, where appropriate. And Congress is actually considering whether to eliminate the federal tax deduction for home-mortgage interest, which has been in place since the early 20th century.

The number of Americans owning homes had steadily increased in each census, thanks to a growing economy, favorable tax laws and easier financing. The only exception was in 1980-1990, when ownership remained unchanged at 64.2 percent.  The U.S. continues to maintain a relatively high rate of homeownership, surpassed only by countries such as Spain, Ireland, Australia and England.

For blacks in the U.S., home ownership rates fell from 46.3 percent in 2000 to 44.3 percent; among whites, the rate dipped to 72.2 percent from 72.4. But Hispanic home ownership in the U.S. has increased from 45.7 percent to 47.3 percent.

When it comes to renting, nearly 44 percent of all renters in the U.S. are minorities, whereas only 22 percent of homeowners are minorities.  The Census also found:

• During the last decade, homeownership rates decreased in each region of the country.  Midwesterners were most likely to own a house, at 69.2 percent, followed by Southerners at 66.7 percent, Northeasterners at 62.2 percent and Westerners at 60.5 percent.

• West Virginia boasts the highest home ownership rate at 73.4 percent. The District of Columbia had the lowest at 42 percent.

• No brainer: homeowners were the majority in most of the nation’s metropolitan areas, but outnumbered by renters in many of the nation’s largest cities. Renters make up 69 percent of the households in New York City, 61.8 percent in Los Angeles, and 55.1 percent in Chicago, cities with high average home values. Houston, which has an average home value of about $170,000, had the next highest percent of renters at 54.6 percent.

Be nice to the seniors! Those age 65 and older have the highest home ownership rate at 77.5 percent. Good, yes, but down from a 2000 peak of 78.1 percent.

Here’s what’s good news for us in Dallas: homeownership was nearly 40 percent among adults 34 and younger, the highest since the mid-1990s. Dallas has a vibrant young population, and home ownership is expected to increase dramatically for minority and foreign-born households in the coming decades, especially in areas that have experienced high levels of immigration, like Texas. According to the Federal Reserve of Dallas, our Hispanic population is younger and faster growing than the overall population. Many Hispanic-headed households will move into the prime home-buying age groups in the coming decades, which could give Texas real estate a boost few other states will experience.