It’s no secret that home ownership rates took a dive during the Great Recession, but what’s more stunning than the overall decline from 69.2% in 4Q04 to 65.6% in 3Q12 is what has happened to the homeowner rates for the younger crowd. From a post at US News & World Report:
The picture is even more grim for younger households who make up most of the important class of first-time homebuyers. Census data reveal that the biggest declines in homeownership were among households headed by those under 35 years of age, with rates plunging from their highest level of 43.6 percent in mid-2004 to 36.3 percent as of the third quarter 2012. Households aged 35 to 44 experienced a decline in homeownership from 70.1 percent at the beginning of 2005 to 61.8 percent as of the third quarter 2012.
The reasons for the decline in homeownership among the younger demographic are twofold. First, foreclosures caused some of these homeowners to become renters or cease to be households entirely and move in with family or friends. Second, tight lending requirements and weak labor markets made homeownership unattainable for many younger households, reducing the flow of potential new homeowners.
A similar story has played out when it comes to household wealth. According to preliminary data from the Federal Reserve’s 2010 Survey of Consumer Finances, from 2007 to 2010, overall household net worth declined nearly 40 percent, largely due to steep housing price declines. Households aged 35 to 44 experienced the largest drop with a stunning 54 percent median decline in net worth. The value of primary residences also fell the greatest in percentage terms for the youngest homeowners: Those 35 and under saw a 23 percent median decline, followed by 21 percent for those aged 35 to 44 and 65 to 74.
Obviously this has long term ramifications for the US housing market and will directly impact the demand for apartment housing for years to come.