U.S. Homeownership Rate Falls to Lowest in Over 50 Years

Education & Training with Adhi Schools, LLC

According to the U.S. Census Bureau, owner-occupied households fell to 62.9% of total households in the second quarter of 2016, the lowest rate of homeownership in the U.S. since 1965. This statistic raises concerns about the future of home ownership and housing affordability in the United States.

Before potential causes of this decline are assessed, the numbers must be put in historical context. Census Bureau statistics show that after a low point in 1965, the homeownership rate climbed (fairly consistently, but with many small dips) to a peak from 1979 through 1981, fluctuating between 65.5 and 65.8%. A dip followed and the 1980s and first quarter of the 1990s consistently had lower homeownership rates than the 1970s. A brief climb occurred before a dip to 63.8% homeownership in the first two quarters of 1994 (a very low point over the last 50 years). Yet from that low point there was a near continuous climb to the peak: 2004, when Q2 and Q4 hit 69.2% owner-occupied households. The next few years displayed rates near the peak, before the drop in 2007. Since 2007 there has been near continuous decline, with only a handful of tiny upward movements as the last nine years mirrored the upward climb of the 90s and 2000s.

The under-35 years old and 35-44 years old demographics are the two that are below the national homeownership rate, pulling the rate down. As of the second quarter of 2016, only 34.1% of under 35 households are owner-occupied, the lowest that number has been since 1994 (the most recent historically bad year). Only 58.3% of 35-44 households are owner-occupied. 45-54 years old is at 69.1%, 55-64 years old is at 74.7%, and 65+ is at 77.9%, proving that older, more established adults are much more likely to own their housing.

The high cost of housing has led to more renting. When a Housing Affordability Index (HAI) is examined the home ownership rate makes a little bit more sense. According to the California Association of REALTORS®, through the first quarter of 2016 only 60% of U.S. households can afford to purchase the median priced home in the state, a number that shows that our owner-occupied rate could feasibly be even lower. Some states, like California, have significantly lower ratings (in California only 34% of households could afford a single family home and only 41% could afford a condo or townhouse).

Meanwhile, the rental market is very strong. Renter-occupied housing units jumped 967,000 units from same period last year. The Wall Street Journal states that “moving into a rental unit has been entirely responsible for rising household formation since the recession began”. While home ownership is down, renting is up and is the sector where more new households are represented. Ralph McLaughlin, chief economist at Trulia, agrees with this assertion and adds that the decline in home ownership is more likely “due to a large increase in the number of renter households than any real decline in the number of homeowner households”.

That means that in this last quarter we didn't see a drop in the gross number of owner-occupied housing units, we saw an increase in rental housing. That is a very significant fact that should calm those that fear this is currently a crisis. Housing affordability is a very real concern and there are arguments to be made that these issues will permanently suppress the percentage of those owning homes. Bottom line: the number of new households that are renting is outpacing the number of new households that are buying—decreasing homeownership rates.

Why is housing so unaffordable? The answer is complicated, but it boils down to supply and demand. Demand is high for the available supply, which is great for property values and long-term investment in property. But it has consequences with affordability and when people cannot afford to make a downpayment and buy a property, they rent or find another arrangement (living at home with parents, for example.)

As the rental market becomes more competitive, prices increase (a logical end of supply and demand). This incentivizes homeownership, in theory alleviating some of the pressure and providing equilibrium in the market. But if rental prices are high enough that saving for a downpayment becomes difficult, renters find themselves stuck renting. This is not just a hypothetical either—a quick glance at a list of homeownership rates by country shows that many well-developed nations have similar or worse rates—Switzerland, Germany, Austria, South Korea, Hong Kong, and Japan all had lower homeownership rates as of 2014. This is a long-term phenomenon that can occur.

The supply of new construction is a contributing factor in some places. In California alone 70,000-110,000 more units of housing would have been required per year from 1980 to 2010 to maintain affordability pacing with the rest of the country. Instead, California has some of the most expensive housing in the country and housing affordability index scores to prove it. In March of this year Business Insider published an article highlighting supply issues in the overall U.S. housing market that suggested that the market has “been under built following the crisis and is ill prepared to handle the coming wave of millennial households that will be formed over the next several decades.” The impacts of not building enough housing have the potential to be felt for a long, long time as prices rise. We are seeing impacts now in the homeownership rate.

Some things to consider for the future: are we comfortable with permanently lower home ownership rates? what are we going to do about housing supply? what will happen to this rate if we have another recession and see foreclosure rates increase again?

Hopefully some pending legislation, like H.R. 3700/ S. 3083 that passed through Congress and will likely be signed into law by President Obama, will help. That bill would ease FHA loan eligibility restrictions and make recertification easier for condominium developments, which could incentivize more homeownership. But the issue of housing supply is much greater than a single piece of legislation and without more construction is unlikely to be eased.


UPDATE: H.R. 3700/S. 3083 was signed into law by President Obama. Read more on the new law here.

 What do you think? Is this an issue we should be concerned about, or will this trend reverse? Should we be concerned with homeownership rates at all? If something should be done, what?


Posted by

Cody Carmen

Comments (21)

Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC


Your post has very good information on the fall of home ownership to the lowest level in 50.

The elements of the lower home ownership level are not being talked about  . . . .  

The lowerest levels of people with full time emopyment (40 hours a week)i in the US since the 1960's.

The lack of jobs and the lack of manufacting in the US.

Student debt.

And the list goes on . . . . the  home ownership levels will up when the number of full time jobs go up.

Just saying . . . . 

Good luck and success.

Lou Ludwig



Jul 29, 2016 01:23 PM
Cody Carmen

I absolutely could have written a book on the number of contributing factors that you mentioned Lou Ludwig. The state of the economy is indubitably always going to be a very important factor.  

Jul 30, 2016 08:23 AM
Scott Thompson

The obvious gets as little redundant doesn't it.

Aug 25, 2016 03:12 PM
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

The housing industry will not improve until we change our national leadership. It takes money to buy homes and that equates to jobs and a thriving economy. 

The last seven and a half years has been a stagnation, over regulation and costly, especially to small business owners. The debt will be nearly 20 trillion dollars, so, we are in a national crisis.

This isn't a political rant, but simply reality and any professional in the real estate industry should be concerned about the change that could occur this fall.

The rising debt must be reduced, the budget must be balanced, peoples income must rise, employers must get relief from regulations and taxes must be REDUCED. Now, if we get that done, the economy will rise and so will home ownership. Lou Ludwig, #1 is a professional.

Jul 29, 2016 05:13 PM
Cody Carmen

Kimo Jarrett a lot of good points here. It is amazing to see the housing market as healthy as it is in a wobbly economy. I think that there are a lot of regulations that impede developers meeting the supply the market is demanding. You live in California, I'm sure you're aware of how difficult it is to build.  

Jul 30, 2016 08:24 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy


What a well developed and written article, and I wish more people have read it. Your last paragraph says it all...more pending legislation, more regulations are more than lifely a temporary fix which in turn will need another temporary fix and ad nauseum.  All these fixes will cost the taxpayer more money as more departments will be created.  A

Jul 29, 2016 11:50 PM
Cody Carmen

Thank you so much Ron and Alexandra Seigel. I could have written more but didn't want to publish another giant report just yet.

I'm not a fan of the expensive fixes either. They don't work. The legislation I mentioned is at least not one of those and actually streamlines some FHA policies, forces housing agencies to audit their assistance programs better, and impacts rural lending as well through the USDA. So hopefully that helps.

If you want to know more about that particular legislation I wrote on it recently here:


Jul 30, 2016 08:29 AM
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

Good morning Cody Carmen  -

Thank you for taking the time to research and write this very informative post - congratulations on having it get featured!   I work in an expensive area of the country, near the Silicon Valley.    I have some first time homebuyers who would were interested in a few condos, but none of the associations are FHA approved.   Many of the comparatively priced homes won't pass an FHA appraisal, so we've been in a holding pattern for months.    It's pretty hard for many young people to own here! 

With your permission, I'd like to reblog this!

Jul 30, 2016 12:59 AM
Cody Carmen

M.C. Dwyer hopefully the legislation I mentioned at the end would help with the FHA approval process! You definitely work in a very competitive market that could use some help in that area.

I would be honored if you chose to reblog this post! You have my full permission and gratitude. 

Jul 30, 2016 08:26 AM
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Cody Carmen Well you certainly did your homework on this one, and I agree with both Lou Ludwig and Kimo Jarrett -- I could not have said it any better.  

Jul 30, 2016 04:26 AM
Cody Carmen

Thank you Diana Dahlberg. I definitely put the work in, no point doing a bad job on a complicated topic!

I appreciate your thoughtful comment! 

Jul 30, 2016 08:30 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Excellent article!  Another factor is all the new construction in multi-family.  There is a lot of multi-family rental units under construction in our area.  Why buy when you can rent something brand new with better amenities than owning!  I saw a complex that had bike rooms, fitness center, and an herb garden!

And yes, the FHA condo guidelines were much needed!

Aug 01, 2016 01:13 PM
Cody Carmen

Thank you Jan! Glad to see new multi-family construction of any type near you. California needs some of that. 

Aug 02, 2016 01:47 AM
Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Cody, well researched and written post, hats off to you! In my area, there are still affordable homes(under 200k) which are purchased mostly by investors with cash. When you analyze homeownership for US and it's decline, not a pretty picture. Government will do what government does.

Aug 02, 2016 10:46 AM
Cody Carmen

Thank you for the compliments to my writing Beth Atalay. And agreed, I don't see this trend reversing in the more competitive markets. Hopefully it's still cyclical or reversible elsewhere. Our tax code so heavily favors homeownership that we will have some problems with wealth creation if we look like more like Europe (oftentimes a society of renters). There are a lot of politicians that complain about inequality without any understanding of the role homeownership can play.  

Aug 03, 2016 01:39 AM
John Dotson
Preferred Properties of Highlands, Inc. - Highlands, NC - Highlands, NC
The experience to get you to the other side!

"Hopefully some pending legislation, like H.R. 3700/ S. 3083 that passed through Congress and will likely be signed into law by President Obama, will help. That bill would ease FHA loan eligibility restrictions..."

Isn't this what got us into the current mess to start with?

ie: Community Reinvestment Act of 1995, in which President Bill Clinton "encouraged" banks to make housing "available" to applicants who could not qualify.

Certainly there are many factors which figure in to home ownership, but easing the qualification hurdles is a recipe for disaster - again.

Aug 03, 2016 07:17 AM
Cody Carmen

John Dotson I respect your input and am thankful that you stopped to comment, but that really is a false representation of the legislation I have cited. I am well-versed on the CRA and the impacts it had. Nothing about this is similar. There will be no lowering of lending standards. The eased restrictions I am referencing are to the percentage of condominium units in a development that must be owner-occupied to qualify for FHA mortage insurance. This essentially allows more people that meet all other lending standards access a property because the property is eligible for insurance.

The debate over whether the FHA should exist or be involved in housing in this manner is of course entirely different. But the reason that H.R. 3700 was passed with enormous bipartisan support is that it essentially removed a series of hurdles that made programs more costly than necessary and made development more difficult. If you would like a brief summary of the new law I have attached a link below:


I have also attached a link to a more thorough article I published before the bill became law:


Aug 03, 2016 07:28 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

national wide it's not really something I concern myself with.  I live in a rural market and our ownership rates are still much higher than the national average. I would be concerned if the market in my area had a drastic swing, but factor in places like Atlanta, San Diego, Detroit where renters are the norm... 

Aug 11, 2016 03:11 AM
Cody Carmen

That is a fair point Tammy Lankford, although national economic trends will still impact you out there. Maybe not today, but the good or bad works its way out eventually!

Aug 11, 2016 03:36 AM
Janis Borgueta
Key Properties of the Hudson Valley - Newburgh, NY
LIC RE Salesperson

Planning for the increasing numbers of people globally and housing for everyone is a really complicated issue. Too many people indeed.

Aug 25, 2016 07:55 AM
Cody Carmen

Janis Borgueta the demand is absolutely outpacing the supply. Great points.

Sep 02, 2016 02:10 AM
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

It will get lower and I think closer to 60%. It may take awhile but it will rise. What NAR has been doing lately in conjunction with other groups on reducing the minimum for student loan payments will help.


Aug 25, 2016 08:46 AM
Cody Carmen

Joe Pryor we will defintely see a bounce when the debt-laden Millenials finally start buying in higher numbers. Then, it is up to the next generation (currently aged 0-17) to see if they can figure it all out!

Sep 02, 2016 02:11 AM
Tim Maitski
Atlanta Communities Real Estate Brokerage - Atlanta, GA
Truth, Excellence and a Good Deal

The link  Census Bureau statistics doesn't have the charts going back to 1965.  Can you put in that link.  I'd be interested to see that long term chart.

Aug 25, 2016 10:13 PM
Cody Carmen

Tim Maitski absolutely, let me see if I can find that for you!

Sep 02, 2016 02:11 AM
Cody Carmen

Tim Maitski thank you for catching that. Not sure if they switched a link or I missed something, but either way that's on me to keep an eye on!

I have attached a link with a lot of cool historical data; homeownership, vacancy rates, etc. Click "Table 14" for what you were specifically looking for and you will get a useful Excel sheet. Thanks again and hope this is helpful!


Sep 02, 2016 02:29 AM
Jennifer Mackay
Counts Real Estate Group, Inc. - Panama City, FL
Your Bay County Florida Realtor 850.774.6582

Well done outling the issues with falling home ownership - perhaps if Hillary gets elected, she'll pay off some of America's homeowners mortgages *laughing* sorry I cou;dn't help myself!

Maybe another bail out will help? *laughing* oh I crack myself up.

What is needed is a path to ownership that hasn't existed in years - we bail out those that bring our economy to near ruin and allow those in charge to retire with millions and never brought up on charges for ruining our economy!

Aug 26, 2016 01:13 AM
Jessie Cochran
Counts Real Estate Group, Inc. - Panama City, FL
Panama City Realty Group

*sigh*it's amazing that with these statistics, Hillary is still being considered the favorite - just what we need, more of the same that brought us to this disgusting mess!

Thanks for the well written article Cody Carmen 

Aug 26, 2016 01:21 AM
Cody Carmen

Jessie Cochran politics certainly don't seem to suggest that we will have any great progress made on the issue in the near future. If you look hard enough you will see impingements to development at the federal level all the way down to municipal.

Sep 02, 2016 02:13 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Congratulations on the Feature ... and on writing such an informative and well written post. 

My name is Kathleen Daniels and I support Kimo Jarrett message. 

Aug 26, 2016 01:55 AM
Cody Carmen

Thank you so much Kathleen Daniels. It is a complicated issue and I simply tried to bring a good deal of information to people's attention. Everyone here thinks about these issues every day and I'm just doing my part!

Sep 02, 2016 02:14 AM
Michael Layton
RE/MAX Desert Properties - Palm Springs, CA
Experience and Trust

Hi Cody,  Great article. I know in my small market there is a pent up demand for new homes.  The few that are being built are coming in above $550K in most cases which puts it out of reach of the buyers with this pent up demand. We seem to be stuck in a bit of rut when it comes to getting homes, in areas people want to live in, below the $500K mark.

Again, thanks for a great article

Aug 26, 2016 02:26 AM
Cody Carmen

Thank you Michael Layton. I 100% understand what you're saying. Southern California is a mess with pent-up demand. I see the phenomenon you're talking about all the time. I think that in the densest populated states we won't see many affordable single family homes until more condos and apartments are built to space the market back out.  

Sep 02, 2016 02:17 AM
Mike Bjork
Evolve Bank & Trust - Redondo Beach, CA

Great post, Cody!  Lots of valuable information.  The Homeownership Rate is an issue.  The Solution is even more difficult!  There's a combination of other factors that play a role in this.  First, the Millenials are being over-burdened with their student debt.  Many are repaying them, like it's a House payment.  Second, they are just starting out in the workforce, so they tend to be on the lower wage-scale than those with experience.  Another factor is the resistance from Lenders.  Because of all the lawsuits, many Lenders are pulling back, especially with FHA financing.  Chase Bank has already said they won't provide FHA financing.  Others, like Quicken Loans and Guild Mortgage, have faced unnecessary attacks from HUD and Department of Justice (DOJ); which may lead them to pull away from FHA loans too.  The CFPB is starting to look at some of the Downpayment Assistant Programs (DAP) to verify if they're complying with the Dodd Frank provisions, so they're becoming a bit more scrutinized.  Unfortunately, there's no easy solution.  If we create more of these loans to grant more access to those whom really cannot afford to repay the loans, then we're back to the aftermath of what led to the Credit Crisis.  Then what have we learned?  I think you're going to see younger generation rent for a bit, then look to inherit their parents' homes when the time arrives; or when they advance in their payscale to afford a home.  California is an extremely difficult place to buy a home, especially in the more populated areas.  If you own a home here, then you've really "moved on up" (as George and Weezy would say -I'm dating myself here)!  I loved the post.  Just a difficult pill to swallow sometimes.  Especially when they have large balances and payments for their student loans.

Aug 26, 2016 02:53 AM
Cody Carmen

Thank you for the kind words Mike Bjork. It really is a complicated issue with uncomfortable solutions and realities. Debt is a real problem. Lending standards are there for a reason. You're correct in a focus on the Millenials. Soon the next generation will be crowding the housing market and the Millenials won't have moved out of the way yet. Frankly, it is time to build if we want results.   

Sep 02, 2016 02:20 AM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Cody Carmen I perhaps will have the shortest comment on 'my take'!

Like real estate, this is also cyclic. The moment renting becomes more expensive, homeownership goes up!

Aug 26, 2016 04:03 PM
Cody Carmen

Praful Thakkar that is typically true, but renting is hitting that point where we should see an increase in homeownership. But the rent prices have interfered with saving for a down payment. 

Sep 02, 2016 02:21 AM
Linda Metallo DiBenardo
RE/MAX Impact, Lockport, Illinois - Lockport, IL

For a potential buyer already saddled with a student loan and car payment, many don't want the added burden of being tied to a mortgage payment, property taxes, house insurance & possible assessment. It's easier to rent, also gives one easier mobility to relocate.

Aug 27, 2016 05:05 AM
Cody Carmen

Linda Metallo DiBenardo great points. With the nature of the market today, renting feels safer. 

Sep 02, 2016 02:24 AM