by Brian Lego — Eye on Housing
After hovering around 66 percent in each of the last three quarters, the Census Bureau reported the seasonally adjusted homeownership rate fell to 65.5 percent during the first quarter of 2012. With this latest decline, the homeownership rate has slipped nearly 4 percentage points from its peak during the mid-2000s and its current level marks the lowest reading since 1997. Among age groups, the 65 years and older cohort has been the only age group to experience some stability in the reported homeownership rate throughout the housing market’s downturn. With an 8.7 percentage point decline (down to 61.4 percent), the homeownership rate within the 35-44 age group has fallen the most among any cohort. The other cohorts have also experienced appreciable declines in homeownership, with drops of 6.8 and 6.1 percentage points for the under 35 and 45 to 54, respectively. The 55 to 64 cohort has registered a smaller rate of decline compared to the other age groups (-4.6 percent), but its homeownership rate also slid to its lowest point on record during the first quarter of 2012.
Although younger households are likely not doubling up with roommates, moving back in with their parents and/or re-entering school to the same extent as they were at the peak of the recession, the slump in homeownership rates among these cohorts will likely continue over the near term. Any recovery in housing demand among this age group will be blunted by the fact that the wide majority will opt for rental units. Since the 45-54 and 55-64 age groups account for nearly half of all owner-occupied households combined, shifts in homeownership among these cohorts will have the largest effects on homeownership rates, and other aspects of the housing market, going forward. As the labor market continues to make progress over the next several quarters and households in the 45-54 and 55-64 age groups see their own economic situations improve, they will likely begin to re-constitute themselves and the majority of these formed households are expected to be homebuyers.
The quarterly census report also examines trends in the vacant housing stock. As of the first quarter of 2012, the rental vacancy rate dropped to 8.8. This marks the lowest reading for this measure in nearly a decade. This result appears to match up with other results that show rising absorption rates for apartment properties even as the supply of new multifamily units continues to climb. The homeowner vacancy rate declined for the fifth consecutive quarter, contracting to 2.2%, which was also its lowest level observed since mid-2006.