Dive Brief:
- The fourth-quarter U.S. homeownership rate rose slightly from 63.7% to 63.8%, perhaps signaling that the metric is now on the upswing, according to The Wall Street Journal. The Commerce Department figures also identified an increase from 58.1% to 59.3% in homeownership rates among people ages 35-44, the group impacted most severely during the housing bust.
- The rise, Bloomberg reported, coincides with job growth and loosening credit. First-time buyers accounted for 32% of December existing home purchases — the group’s highest share since August.
- The homeownership rate, while up from a 48-year low in the second quarter, remains well below the June 2004 high of 69.2%.
Dive Insight:
"The homeownership rate has found a floor," Matthew Pointon, U.S. property economist for Capital Economics Ltd., told Bloomberg. "We expect it to rise very gradually over the next few years."
A possible reason for a rise in the homeownership rate could be the fact that a portion of the nine million owners who lost their homes to foreclosure, short sale or another event are finally returning to the market.
In December, Zillow predicted that 2016 would not be a banner year for homeownership, as the market would be affected by "deteriorating affordability," particularly among young renters and first-time homebuyers. The real estate research site also said that home prices would grow so fast that the bottom third of wage earners would be priced out of the housing market altogether.
Zillow’s prediction is a continuation of last year’s housing narrative of the challenges that potential homebuyers face. Rising rents are making it increasingly difficult for people to save for down payments, and first-time buyers — the group mostly likely to be saddled with student debt — represent only one-third of the housing market, the lowest share in 30 years.