consumer trends

Homeownership Hits 50-Year Record Lows

Weakened Housing Market Restricts Economic Growth, Stalling the American Dream for Millions

BERKELEY, Calif., March 31, 2017 /PRNewswire/ — Over the past ten years, homeownership rates in the U.S. collapsed, wiping out more than three decades of progress toward the American Dream for millions of households.

Overall, the national homeownership rate dropped from a peak of 69% in 2004 to an average of 63.4% in 2016.

If the homebuilding industry alone returned to a more normalized level in 2016, Rosen Consulting Group (RCG) estimates that more than $300 billion would have been added to the national economy, representing a 1.8% boost to GDP, according to a new report “Homeownership in Crisis: Where are We Now?” released today by Rosen Consulting Group and the Fisher Center for Real Estate & Urban Economics, Haas School of Business, University of California, Berkeley.

“Bolstering homeownership in a safe and sound way is not just about helping households secure financial stability, but may be the single most important factor in returning the United States to a path of robust economic growth,” said Ken Rosen, Chairman of Rosen Consulting Group and UC Berkeley’s Fisher Center for Real Estate & Urban Economics. “This report highlights the current state of homeownership and the many factors that contributed to the plunge in homeownership rates during the past decade.”

Despite recent improvements in market fundamentals, low homeownership rates persist. Compared with pre-recession peaks, homeownership declines were largest among minority households, young adults, one-person households and single-parent households, leaving the social and economic benefits of owning a home out of reach for millions of households.

Key Findings on National Homeownership Trends

  • As of 2016, the African American homeownership rate dropped to 41.5%, falling by 7.6 percentage points from the previous peak (see Figure 1). This was the largest decline of any major racial group and was 30 percentage points lower than white household homeownership. African American homeownership declined even as the total number of African American households increased by 2.7 million or 19.8% since 2005.
  • By age cohort, young adults were hit hardest by declines in homeownership. The homeownership rate for households aged 25 to 29 years old dropped by 10.9 percentage points to 30.9% in 2016. Similarly, the homeownership rate for households aged 30 to 34 years fell by 12.0 percentage points to 45.4%, compared with the pre-recession peak.
  • In 2015, the homeownership rate for single-parent families was 48.2%, 31 percentage points below married family homeownership rates. One person households performed only slightly better, with a homeownership rate of 52.2%, which was 27 percentage points lower than married families.

Key Findings on Understanding the Plunge in U.S. Homeownership

  • More than 9.4 million homes were lost in the foreclosure crisis, through short sales and deed-in-lieu transactions from 2007 through 2015. Access to easy, yet unsafe, credit in the form of non-traditional mortgage products was a major factor contributing to foreclosures.
  • After the foreclosure crisis, lenders moved in the other direction, severely tightening access to safe and affordable mortgages, and restricting households with moderate credit scores from buying homes. Since 2010, lending to applicants with credit scores ranging from 620 to 660 retreated sharply and loans to homebuyers with credit scores below 700 declined to 27% of first-lien mortgages in 2014, down from 33% in 2010. As of third quarter 2016, the median credit score for conventional mortgages was 760, up from 707 in the fourth quarter of 2006.
  • The rise in student debt is another important factor influencing the affordability of homeownership for young households. Total student debt nationwide quadrupled since mid-2004 to approximately $1.3 trillion, with both the number of borrowers and the average debt load rising, making it harder for many young households to afford homeownership.
  • Following multiple years of rising rents and limited income growth, cost-burdened renter households, defined as those paying more than 30% of income toward rent, increased by 3.6 million, diminishing the ability to save for a down payment for millions of Americans.
  • The overall pace of household formation decreased sharply following the recession, reducing demand for all types of housing. We estimate that 3.4 million additional households would have formed between 2008 and 2015 if household formation had remained on pace with the long-term average, many of whom would have been homeowners.

Key Findings on the Economic Impact of Declining Homeownership

  • In 2016, RCG estimates that more than $300 billion would have been added to the national economy if the homebuilding industry returned to a normalized level, representing a 1.8% boost to GDP.
  • Since 1959, total housing-related spending, including both owners and renters, accounted for an annual average of 18.9% of GDP, but decreased significantly to 15.6% of GDP as of 2016, a significant decline.
  • As of 2016, the residential fixed investment (RFI), or the spending on newly constructed homes in the United States, as a percentage share of GDP remained below the long-term average, representing only 3.6% of total GDP, compared with an average of 5.3% since 1959, or 6.2% from the pre-recession peak, further indicating the impact of homeownership’s decline on the economy.

Outlook for Homeownership

Many of the most significant trends that contributed to the decline in homeownership during the past decade are expected to stabilize or reverse in the coming years. Increased job opportunities, and moderate, but accelerating, income growth should bolster the number of households seeking to enter the for-sale market. Despite these improvements, considering the demographics of a large millennial population, increasing minority households, and a growing number of single-parent and one person households, low homeownership rates will persist nationally without policies to improve access and affordability among these key groups.

Figure 1: Homeownership Rates by Household Type

Household Type



Percentage Point

Under 25 Years Old




25 to 29 Years Old




30 to 34 Years Old




35 to 44 Years Old




45 to 54 Years Old




55 to 64 Years Old




65 Years and Over




White Households




African American 




Hispanic American




Other Races




Married Families








One Person




Other Households




Note: Peak from 2004 to 2007; Current data as of 2016 or 2015

Source: Census

To read the full report, please click here.




About the Study
Homeownership in Crisis: Where are we now? was prepared by Rosen Consulting Group for the National Association of REALTORS® and jointly released by Rosen Consulting Group and the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley Haas School of Business. This report, the first of three papers to be prepared by Rosen Consulting Group in 2017, highlights important demographics and economics trends behind the recent decline in homeownership and provides an assessment of the national housing outlook.
About Rosen Consulting Group
Rosen Consulting Group (RCG) is a leading independent real estate economics consulting firm. Founded in 1990 and with offices in Berkeley and New York, RCG provides strategic consulting and unbiased investment guidance through all market cycles. RCG is a trusted advisor to leading banks, insurance companies, institutional investors, and public and private real estate operators. For more information go here.
About the Fisher Center for Real Estate & Urban Economics
The Fisher Center for Real Estate & Urban Economics (FCREUE) mission is to educate students and real estate professionals, and to support and conduct research on real estate, urban economics, and the California State economy. FCREUE strives to be the leading center for research on the California economy and excels nationally as a center for urban economic and public policy research. It also regularly provides a practical forum for academics, government officials, and business leaders. For more information, go here.