The Urban Institute’s Housing Finance Policy Center just released a major new longitudinal study of expected household formation and homeownership rates from 2010 to 2030.
The paper predicts that the homeownership rate will continue to decline through 2030 and that a major rental surge is upon us, a surge the United States is not truly prepared to meet.
Most concerning, they forecast the homeownership rate to drop to 61.3% by 2030.
For context, the homeownership rate in the first quarter of this year fell to 63.7%, the lowest since 1990, according to the U.S. Census.
The homeownership rate is the ratio of households that own to overall households — the remaining being rental households.
A blog written by the study authors highlights five key take-aways:
- A rental surge is coming. 13 million of the 22 million new households that will form between 2010 and 2030 will seek to rent, rather than buy, their homes.
- Most of the new households that will form between 2010 and 2030 will be non-white.
- The homeownership rate will decrease for all age groups, except those over 75. The authors predict that the overall homeownership rate will be 61.3% by 2030: 70% for whites, 40% for African Americans, and 48% for Hispanics.
- African Americans will fall further behind all racial groups in homeownership. By 2030, the homeownership rate for African Americans will be 40%, a large drop from 46% in 2000. The rate for Hispanics will move in the opposite direction, increasing from 46% in 2000 to 48% in 2030.
- The number of senior-headed households will increase dramatically. The number of households over age 65 will increase from 25.8 million in 2010 to 35.4 million in 2020 and to 45.7 million in 2030.