Minorities, Young People Hardest Hit by Recession, Showing Lowest Levels of Homeownership Today

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Minorities were hit the hardest by the housing crisis, and show lower levels of homeownership today.

The economic recession of 2007-2009 affected most Americans in depressingly real and tangible ways. Two groups of Americans are disproportionately affected, still, by the downturn.

A new study by Apartment List shows that the economic downturn had the greatest impact on homeownership among minorities and young Americans aged 18-45, particularly those in the 35-44 age range.

Analysts at Apartment List, an apartment location website, looked at Census data and reported U.S. homeownership rates in general have fallen steadily, recently dropping to their lowest levels since 1965.

In Dallas, the homeownership rate fell from 60.9 percent to 58.7 percent from 2007-2016. The drops were biggest among African Americans, where homeownership fell by 6.1 percent.

“African Americans were highly affected [by the recession], said said Andrew Woo, director of data science and growth at Apartment List. “In Dallas, it is a large drop [in homeownership], larger than the nation average, which is 5.3 percent. What we notice is that it’s very much tied to employment and socioeconomic trends.”

During this same time period, rents increased by 4.2 percent in Dallas, even as owner costs (mortgage, maintenance, etc.) fell by 11.8 percent. So the people least able to afford it were paying more (in rent), less able to save toward a down payment, and therefore less likely to buy a home.

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The largest declines in homeownership nationwide occurred among Hispanics (-4.0 percent), African Americans (-5.5 percent), and other minorities (-6.7 percent). Non-Hispanic whites were relatively less affected, with a homeownership decline of -3.3 percent.

This reality has the potential to widen inequalities in our society, the report notes.

Our research indicates that not owning a home has a sizable financial cost, as renters miss out on low mortgage rates and are hit by higher rents. This phenomenon may exacerbate inequality in our society, as those wealthy enough to invest in real estate benefit from lower interest rates, whereas minorities and younger Americans, hit by rising rents and student debt, risk being locked out of homeownership.

Americans aged 35-44, often first-time homeowners or young families, were the hardest hit age group from the recession. Their homeownership rate fell from 68 percent to 59 percent. The group that was next most affected was Millennials (under 35 years old), many of whom have delayed homeownership as a result of the recession.

“It is concerning that among 35-to-44-year-olds, the group that is most likely to want to buy a house and start a family, the homeownership rate is falling so much” Woo said. “For the Millennials, the trend we’re seeing nationwide is a delay in homeownership [because of the recession].”

 

3 Comment

  • These numbers get widely reported but I would like to add a few things that might be misleading. The most obvious is the reporting based on %s of age groups, the raw numbers in those groups do vary quite a bit. The best example of that being “the hardest hit age group” we know there are at least 7-10% more millennials than GenXers, so without an astronomical gain in new home construction the % is almost certain to fall. The other side might just be record numbers of new household creation because the demographic base is much lager and consider willing buyers far outnumbers product, I would say that is closer to reality.

    Then the assumption to blame things on the recession, or many times reported “student loan burden” seems like a bit of politicizing the simple economics of young life. The trend for decades is for the next generation to delay life, that is not a new fad.

  • you forgot about single women….also hard hit by the recession and having great difficulty finding full time employment since 2009.