Owning a home has long been a big part of the American Dream. Despite this, the proportion of adults who own their homes has been on the decline.
Homeownership rates have been dropping since the middle of the last decade. Meanwhile, rental vacancies spiked during the great recession and have plummeted since, indicating a shift from owning homes to renting apartments.
Nordea Markets economist Aurelija Augulyte tweeted out this chart comparing US homeownership rates with rental vacancies:
There are a few big reasons that this shift has taken place. In a blog post last year, Trulia chief economist Jed Kolko pointed out that the demographics of millennials are different from earlier generations: Millennials are less likely to be married or to have children in their twenties than the twenty-somethings of the 80s and 90s. Historically, homeownership has been correlated with marriage and children.
Meanwhile, Kolko also observed that after the housing bubble burst, homeownership was sharply down among middle-aged adults. Adults who were in their late twenties or early thirties during the bubble bought overly expensive houses, and many lost those houses after prices collapsed and in the wake of the Great Recession.
The Federal Reserve has worked aggressively to stimulate the housing market by keeping mortgage rates low. However, we have yet to see a turn in ownership rates.