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HOMEOWNERSHIP

Homeownership rates increased by about 6 million households during the past 5 years, boosting the national homeownership rate to 66.3%; according to "The State of the Nation's Housing 99". However, the increase is limited almost entirely outside city lines and primarily in the South and West. People are not buying houses in the cities.

The lowest mortgage interest and unemployment rates since the 1960s sent home-ownership rates soaring in 1998 and that will probably continue for the next decade. However, the impact on the number of Americans in rental housing has been minimal. Higher overall housing demand has continued to drive rental rates to their highest level - ever.

The US Department of Housing and Urban Development has made home ownership for low to moderate income families the agency's primary goal for the last 18 years . That should have been bad news for the rental housing industry, ... but it wasn't.

From the time of Roosevelt, and more recently since Jack Kemp was Housing Secretary under President Reagan, and Coumo's kid under Clinton, HUD has had a special focus on promoting homeownership among its targeted groups. However, the nation's homeownership rate has just been announced (June 1, 1999) as 66.3%. That is one half of one percent above the 1980 rate achieved in Reagan's first year in office, when it had reached 65.8%.

Now, after nearly 20 years of HUD intervention in the housing market and hundreds of millions in subsidies, not much has really changed. However, former HUD Secretary Henry Cisneros announced before he left: "We are in the midst of an unprecedented period of growth in homeownership."

At a special meeting of the National Partners in Homeownership (a nationwide coalition), Vice President Al Gore credited the Administration's three point strategy with helping to achieve the 66.7 % rate. That strategy, he said, includes deficit reduction, investing in America's people, and opening global markets to American business.

The numbers below appear to reflect that the rise and fall in homeownership is more likely tied to the state of the national economy than any presidential or HUD policy. The reports says that increases in immigration, and the number of young or newly formed households will fuel a continued increase in the housing market for the next ten years.  Although there has been a 3 % increase over the last few years, homeownership vs. rental housing rates seem to be an entrenched factor of American society.

In most areas of the nation privately owned rental housing has remained stable at about 30 percent of the total housing market for more than 30 years. Recent government programs have apparently only impacted public housing in any significant way.

Percentage of US Population in Rental Housing 

2000

1998

1996

1994

Nation overall

32.3

33.7

34.4

35.8

Minorities

53.8

54.2

54.5

56.3

Female head of household

48.2

49.5

49.4

51.3

Households below median income

50.2

50.8

50.6

51.4

Married Couple Under Age 35

43.1

41.8

42.2

42.9

Source: Current Population Survey. Bureau of Census

U.S. Population
(in millions)

1990

1999

Population Growth

Share of Homeowner growth 1994-99

Asian

6.9

10.4

5.06%

8.6%

Black

29.3

33.3

1.60%

13.3%

Hispanic

22.4

31.8

4.48%

15.2%

White

188.3

196.4

.53%

62.9%

 25 Million

6.9 Million new Homeowners

Over the past 20 years, the number of renter households with incomes of $10,000 or less has grown from 7.0 million to 10.0 million-an increase of 43 percent. At the same time, the number of homeowner households with incomes above $50,000 has more than doubled, surging from 9.2 million to 18.9 million. As a result, the homeownership rate for the low-income group declined from 46 percent in 1974 to 41 percent in 1997, while that for the high-income group held more or less steady at 86 percent.

Contributing to the growth of low-income renters is the rising number of single mother families with children and elderly single-person households. Of the nearly 10.9 million renter families with children in 1997, 3.6 million (33.2 percent) had extremely low incomes (less than 30 percent of area median). Another 1.4 million (48.2 percent) of renter households with heads aged 65 and over had equally low incomes. The growth of these two household types may account for nearly all of the increase in extremely low-income renters between 1978 and 1997.

Although rental housing is necessary for many low-income households, some market areas have significant numbers of high-income renters. In fact, 3.2 million households with incomes in excess of $50,000 rented their homes last year. Among them are higher-income younger households expecting relocation or waiting for children to make the transition to homeownership. There are always other households who choose to rent just because of cost or convenience considerations.

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