Home ownership rate and me, three years later

I made a programming note in one of the footnotes to November 2017 driving update for Pearl plus Tesla Truck and Chevy Bolt news.

Yesterday was also the third anniversary of putting an offer on my current home and having it accepted.  I plan on writing about that and my prediction that the U.S. home ownership rate would start going up tomorrow.

Here's what I wrote three years ago Thursday.

I showed my hand to Greer later in the entry, when I wrote, "Now to see about buying property as it struggles off the bottom."  Well, that time has arrived.  We've made an offer on a house and it's been accepted.  Wish my wife and me luck as we both get on board, just in time for the housing market to go back up.  Yes, it's a business as usual decision and I know these are not business as usual times, but as I'm fond of saying, I can't be all DOOM all the time.

It took just over a year and a half for the home ownership rate to rise, as the Washington Post managed to document the bottom in Why the decline of the homeownership rate is good news.

The U.S. homeownership rate has just fallen to its lowest level since the Census Bureau began tracking it in 1965.

During the second quarter of this year, only 62.9 percent of U.S. households were owner-occupied residences, down from the all-time high of 69.2 percent reached in the fourth quarter of 2004.

Contrary to entrenched conventional wisdom, however, the ongoing decline of the homeownership rate is actually good news.

Here’s why: Thanks to recovering real estate values, today’s homeowners as a group have the same equity in their property — roughly 58 percent — that the record-size cohort did back in late 2004, according to the Federal Reserve. Ergo, there’s now more equity, on a per- household basis; current homeowners’ tenure is that much more sustainable and secure.

“They are now more able to weather an economic disaster,” says Ralph McLaughlin, chief economist of Trulia.com, the online home-listing service.

To put it another way: The United States actually has more homeownership, in economic terms, than it did when the homeownership rate, a measure of mere legal ownership, was higher. Accordingly, the economy should also be less vulnerable to another real estate shock.

We’re still not back to the rock-solid days of 1983, when the homeownership rate was a hair under 65 percent and equity hit an all-time high of 70 percent.

The following graph from the St. Louis Federal Reserve shows that previous peak in home ownership rate and then some back to the 1960s.  It also shows how small and recent the rebound in home ownership rate is.


Just the same, I'm glad to have jumped on the trend just before it turned around, just like I did the last two times when my ex-wife and I bought in 1994 (not 1995, as I misremembered), which was a little ahead of the rapid rise in home ownership, or before it accelerated, like when I sold in 2006, a couple years after the peak but before the bottom fell out of both housing values and home ownership rates.  As I wrote three years ago, "I shouldn't be reassured by moving with the herd, but in in this case, I am."