It’s no secret that the real estate market is rapid changing and adapting to our new economic state, however I recently found an article that I found interesting about home occupancy, more specifically the divide between renters and owners. Renters now spend five percent more of their household budgets on housing costs than do homeowners. This difference is growing due to the rise in prices of rentals.
Since 2005, homeowners’ expenditures for housing approximately rose from 31.9 percent of their household budget to 33.2 percent, but renters’ costs have risen even more, from 35.6 percent to 38.4 percent, according to the October CoreLogic U.S. Housing and Mortgage Trends.
Homeowners have increased their housing expenditure allocation by 12 percent since 1985, while renters increased by 22 percent.
As consumers begin distributing more and more of their expenditures toward housing, they have less money to spend on non-housing consumption. The major decline in a household’s budget occurred in transportation costs which fell by 17 percent and 22 percent since 1985 for homeowners and renters, respectively.
The increased spending allocation for housing, which is largely due to the stagnation of incomes among Americans of home buying age beginning in the 1990s, has actually contributed to the decrease in homeownership by making buying a home more difficult.
Demographics have also contributed to the decline in homeownership. For the 25 to 34 age group, the homeownership rate fell from 51.6 percent in 1980 to 42.0 percent in 2010. For 35 to 44 year olds, homeownership rates fell from 71.2 percent to 62.3 percent over the same time period.
Also noteworthy numbers of foreclosures are remaining on the market for as long as four years or more. One out of five foreclosures (21 percent) is taking more than a year to sell. Nearly 10 percent, or 23,200 properties that were auctioned in 2006, remained in REO as of Q2 2010. In other words, these properties have been in REO constantly since 2006.
I found these statistics to be very interesting, considering other trends that have recently taken place in the market. What’s your opinion about the ratios around renters vs. owners?
Comments (27)Subscribe to CommentsComment