Here’s some good news on the nation’s housing front: Homeownership rates among young Americans are up for the first time in years.
Researchers at the Joint Center for Housing Studies of Harvard University say lower mortgage rates have made it possible for more people under 35 to buy a home in recent years.
Homeownership rates have edged higher as a result. That represents a turnaround from the 1980s, when economic trends pushed many buyers to the sidelines. Homeownership rates plunged as a result. Researchers now say that slide may be over.
“It looks like it has turned a corner,” said researcher Nancy McArdle at the center. As evidence, McArdle pointed to homeownership rates for heads of households younger than 35.
For people 25 to 29, the rate was 34.9 percent last year, up nearly two percentage points over 1992. For people 30 to 34, the rate was 50.5 percent, up half a percentage point from 1992.
Those rates are still below 1990 levels, but the shift in direction may signal the reversal of a trend.
“Our sense is generally that it is stabilizing,” McArdle said.
Homeownership rates are considered an important measure of the nation’s standard of living. For many individuals, a home also represents an important source of personal wealth.
“Homeownership is a fundamental part of the American dream,” the center noted in its annual study, The State of the Nation’s Housing, released last week in Miami. “Today more households are achieving this goal and the overall homeownership rate is again on the rise.”
That increase-from 64.1 percent in 1990 to 64.7 percent in 1994-can be explained largely by a surge in ownership among the elderly, the study said.
The homeownership rate for people age 65 to 74 was 80.3 percent last year, up from 75.2 percent in 1980.
The report also highlights other positive trends: The cost of owning a starter home has declined dramatically for young couples since 1990, the center reported. The annual after-tax cost of a home for a couple under 30 stood at $7,230 last year, down from $8,347 in 1990.
“The recent upturn in the national homeownership rates results, in part, from a decade-long decline in homeownership costs,” the study said.
The chief cause of those lower costs was the decline in mortgage rates. The average rate for a 30-year fixed mortgage hit a 25-year low of 6.74 percent in October 1993. Last week, the average stood at 7.53 percent.
Young immigrants have made impressive gains in homeownership, the study found. Among heads of households age 25 to 29 who entered the country during the 1970s, only one in four owned a home in 1980. Ten years later, the homeownership rate among that group had risen to 55 percent.
Not all is rosy, however. The study notes some troubling trends. “Over the past decade, homeownership rates among higher-income households have risen while those for lower-income households have fallen,” the study said. “Despite a general decline in costs, many low- and moderate-income households are still unable to move up the housing ladder to homeownership.
“For some households, the obstacle is lack of funds for making the down payment for a home; for others, it is lack of housing suitable for purchase. And for still others, discrimination is the primary barrier.”
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