Just Released: Press Briefing on the Evolution and Future of Homeownership - Liberty Street Economics
Liberty Street Economics

« How Has Germany’s Economy Been Affected by the Recent Surge in Immigration? | Main | New China Tariffs Increase Costs to U.S. Households »

May 22, 2019

Just Released: Press Briefing on the Evolution and Future of Homeownership



The New York Fed today held a press briefing on homeownership in the United States, in connection with its release of the 2019 Survey of Consumer Expectations Housing Survey. The briefing opened with remarks from New York Fed President John Williams, who provided commentary on the macroeconomic outlook and summarized the prospects for homeownership. He noted that the labor market remains very strong and that there seems to be little evidence of inflationary pressures, meaning that the economy is on a healthy growth path.

The briefing continued with a presentation by Bank economists on how homeownership has evolved over the past fifty-plus years. After a long period—the thirty years between 1965 and 1994—of relatively minor fluctuations around 64 percent, the homeownership rate began an unprecedented 5 percentage point rise over the next decade, from 64 percent in 1995 to over 69 percent in 2004. This rise was driven primarily by a high rate of entry into homeownership, particularly among young people and first-time buyers, with the New York Fed’s Consumer Credit Panel data showing that transitions into ownership ran quite high through 2003. A low rate of exit from homeownership via foreclosure also contributed to the high net increases in ownership.

By 2007, however, both entry and exit were going in the opposite directions: first-time purchases declined and foreclosures began rising sharply as home prices fell and the recession began to take hold. This dynamic—high exits via foreclosure and low rates of transition into ownership—continued to reduce the homeownership rate for a decade, through mid-2016. By that point homeownership had fallen to 62 percent, well below the pre-boom level and matching the lowest rate recorded since at least the 1960s. Homeownership has subsequently bounced back, and the current rate of 64.2 percent is very close to the longer-run average.

The outlook for homeownership over the next decade will depend on several factors. The tight mortgage credit conditions of the last decade have produced a group of homeowners who are at comparatively low risk of default, so changes in the homeownership rate will likely be determined primarily by rates of entry into homeownership. Barring a change in the economy, the nation’s aging population will likely push up homeownership since older households are historically much more likely to own. Further, the majority of current renter households would rather own; nonetheless, tight credit and other constraints, including the high prevalence of student debt, mean that many of these same renters see it as unlikely that they will ever be able to enter into homeownership. How these factors—demographics, preferences, and constraints—play out over the next decade will determine where the homeownership rate lands.


Disclaimer
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.





Armantier_olivierOlivier Armantier is an assistant vice president in the Federal Reserve Bank of New York’s Research Group.


Haughwout_andrewAndrew F. Haughwout is a senior vice president in the Bank’s Research and Statistics Group.


Kosar_GizemGizem Kosar is an economist in the Bank’s Research and Statistics Group.


Lee_donghoonDonghoon Lee is an officer in the Bank’s Research and Statistics Group.


Scally_joelleJoelle Scally is a senior data strategist in the Bank's Research and Statistics Group.


Vanderklaauw_wilbertWilbert van der Klaauw is a senior vice president in the Bank’s Research and Statistics Group.



How to cite this blog post:
Olivier Armantier, Andrew F. Haughwout, Gizem Kosar, Donghoon Lee, Joelle Scally, and Wilbert van der Klaauw, “Just Released: Press Briefing on the Evolution and Future of Homeownership,” Federal Reserve Bank of New York Liberty Street Economics (blog), May 22, 2019, https://libertystreeteconomics.newyorkfed.org/2019/05/just-released-press-briefing-on-the-evolution-and-future-of-homeownership.html.
Posted by Blog Author at 11:01:20 AM in Foreclosure, Household Finance, Housing, Mortgages
Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

The comments to this entry are closed.

About the Blog
Liberty Street Economics features insight and analysis from New York Fed economists working at the intersection of research and policy. Launched in 2011, the blog takes its name from the Bank’s headquarters at 33 Liberty Street in Manhattan’s Financial District.

The editors are Michael Fleming, Andrew Haughwout, Thomas Klitgaard, and Asani Sarkar, all economists in the Bank’s Research Group.

The views expressed are those of the authors, and do not necessarily reflect the position of the New York Fed or the Federal Reserve System.


Economic Research Tracker

Liberty Street Economics is now available on the iPhone® and iPad® and can be customized by economic research topic or economist.


Most Viewed

Last 12 Months
Useful Links
Comment Guidelines
We encourage your comments and queries on our posts and will publish them (below the post) subject to the following guidelines:
Please be brief: Comments are limited to 1500 characters.
Please be quick: Comments submitted after COB on Friday will not be published until Monday morning.
Please be aware: Comments submitted shortly before or during the FOMC blackout may not be published until after the blackout.
Please be on-topic and patient: Comments are moderated and will not appear until they have been reviewed to ensure that they are substantive and clearly related to the topic of the post. We reserve the right not to post any comment, and will not post comments that are abusive, harassing, obscene, or commercial in nature. No notice will be given regarding whether a submission will or will not be posted.‎
Disclosure Policy
The LSE editors ask authors submitting a post to the blog to confirm that they have no conflicts of interest as defined by the American Economic Association in its Disclosure Policy. If an author has sources of financial support or other interests that could be perceived as influencing the research presented in the post, we disclose that fact in a statement prepared by the author and appended to the author information at the end of the post. If the author has no such interests to disclose, no statement is provided. Note, however, that we do indicate in all cases if a data vendor or other party has a right to review a post.
Archives