Is the dream of homeownership fading away?
By George S. Burgan, Director of Communications, Atlanta Neighborhood Development Partnership, Inc.
Despite a rebounding economy, the nation’s home ownership rate continues to drop. For the eighth consecutive year, the national home ownership rate has fallen – from its peak of 69 percent in 2004 to a current rate of 63.7 percent. Of course, the issue of decreasing homeownership is local concern as well. Georgia and metro Atlanta have both have a homeownership rate of 62.9 percent – nearly a full point below the national average. Is the dream of homeownership fading away?
According to a recent discussion of the 2015 State of the Nation’s Housing report from the Joint Center for Housing Studies (JCHS) at Harvard University, there are a variety of issues weakening homeownership demand.
“There has been much less household formation which has pulled down the level of new construction. And post-recession household income levels are just getting back to 1995 levels, which has restricted buying power,” said JCHS’s Managing Director Chris Herbert.
Paul Weech, NeighborWorks America president and CEO explains that our demand concerns come from both cyclical and structural issues.
“Why are some people not buying homes? We’re suffering from post-traumatic stress syndrome as a result of the foreclosure crisis. Prior to the crisis, everyone expected housing prices to rise. You could buy a home, invest in a home, and make money. It turns out now, that’s not necessarily true,” said Weech. “There are also structural changes in the market, especially in the rules governing lending and servicing. And it’s going to change the way people access credit going forward.”
On the other side of the coin, there is tremendous demand for rental housing. Single-family detached homes are playing a huge role nationally and locally in meeting that increased demand. According to the JCHS report, 3.2 million single-family homes were added to the rental supply between 2004 and 2013. It is estimated that metro Atlanta had more than 40,000 homes shift to rentals as a result of private equity investors in the market. And multifamily development in the region is once again soaring – as are rental rates.
While every community should have a mix of homeownership and rental opportunities, we are witnessing a significant shift toward the rental environment. To many, this shift is troubling. Homeownership has been shown consistently to provide many societal benefits – improved health and educational outcomes for children, increased civic engagement and volunteerism, reduced crime and increased wealth, to name a few.
Every effort should be made to address homeownership levels and affordability in the rental market. However, there is much concern by housing advocates that funding and policy solutions need to be more proactive.
The recently launched J. Ronald Terwilliger Foundation for Housing America’s Families proposes a new national conversation on housing policy.
“Millions of families are confronted by a rental market they can no longer afford and a homeownership market for which they do not qualify. Absent a comprehensive and sustained policy response, these problems of affordability and access will continue to worsen due to powerful demographic changes,” said Terwilliger, the Foundation’s Chairman and Founder.
So, is the dream of homeownership truly fading away? For some, it is. But further economic recovery, a proposed national housing dialogue, and subsequent policy decisions would help stem the tide.