US Homeownership Rate Hit 51-Year Low in Second Quarter

The US homeownership rate fell to the lowest level since 1965 as rising prices put buying out of reach for many renters. The share of Americans who own their homes was down to 62.9% in the 2Q, according to a Census Bureau report released last Thursday. It was the second straight quarterly decrease, down from 63.5% in the previous three months.

The homeownership rate peaked at 69.2% in June 2004. The rate has declined every year since 2006 before the housing bubble burst. The homeownership rate fell in all regions of the country in the latest report.

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The drop extends a years-long decline from the last housing boom, in part due to record-high home prices in many parts of the country, tight credit and a shift toward renting in the aftermath of the Great Recession. First-time buyers have been struggling to find affordable properties as low mortgage rates and an improving job market spur competition for a tight supply of home listings.

Median home prices rose 5.2% in May from a year earlier, only 3% below their 2007 record high, according to the S&P CoreLogic Case-Shiller Index of values in 20 large cities around the country released last week.

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Median US home prices rose even more in June (+6%) and hit an all-time high of $231,000, surpassing the previous peak set in 2007, according to ATTOM Data Solutions (formerly RealtyTrac).

The homeownership rate for Americans ages 18-34 – also known as the “Millennial Generation” – fell to 34.1% in the 2Q from 34.8% a year earlier. For the first time in more than a century, Americans ages 18-34 are more likely to be living with their parents than in a household shared with a spouse or partner, according to Pew Research.

The drop in home ownership is largely due to a delay in home buying by the Millennials, who have the lowest ownership rate of their age group in history. Millennials are not only burdened by student loan debt, but they have also delayed important life choices like marriage and parenthood, which are the primary drivers of homeownership.

As a result of this growing trend, the rental market for housing is strong across the nation, which has meant a sharp rise in rents in recent years. That, in turn, keeps many young renters from being able to save for a downpayment on a home. It is also more difficult to qualify for a mortgage today than it was during the last housing boom.

As noted above, home prices have been rising at a far-faster clip than wage growth or employment growth. In addition, the supply of entry-level homes for sale continues to drop. Add it all up, and young would-be buyers of homes are continuing to rent longer.

And we’re not just talking about young people anymore. Broadly speaking, the falling homeownership rate is a sign that renting isn’t only for those just starting out or making a transition, but is becoming increasingly necessary for many older households as well. This worsening trend has far-reaching implications for our economy, and none of them are good.

Obama is the Only President Never to See 3% GDP Growth

In light of last Friday’s very ugly GDP report showing 2Q growth of only 1.2% versus the pre-report consensus of 2.6%, I think it is safe to assume that the US economy will not hit 3% growth between now and when President Obama leaves office in January.

If this is true, Obama will be the only president in US history not to have a single year of 3% GDP growth in the economy. Every other president in the Modern Era, even the really bad ones, had at least one year when US GDP grew by at least 3%, according to historical data from the Commerce Department.

Yet this has not happened under Obama even though he has had two terms in the White House. Even if there is a dramatic increase in GDP growth in the second half of this year, which looks very doubtful, President Obama will leave office with the fourth worst economic record in US history, above only those of Herbert Hoover, Andrew Jackson and Theodore Roosevelt.

Of course, the mainstream media will never report this news. So keep this in mind when Obama and Hillary Clinton try to claim otherwise on the campaign trail between now and the election in November.

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