Dive Brief:
- According to the Census Bureau’s Housing Vacancy Survey, Generation X might be staging a housing comeback, as it was the only demographic to increase its year-over-year homeownership rate in the first quarter, economists with the National Association of Home Builders reported.
- Gen X homeownership was up 0.5% to 58.9%, while total homeownership in the U.S. was down 20 basis points year over year to 63.5% — well below the 25-year average of 66.2%.
- Baby boomers older than 65 lost homeownership ground and saw their rates fall 20 basis points to 78.8% year over year, while the youngest boomers’ (ages 45 to 54) rates dropped 90 basis points.
Dive Insight:
Homeowner, vacancy rates (1.7%) and rental rates (7%) were both down year over year in the first quarter, and the number of households (117.5 million) rose by 500,000. The NAHB said the increase in households will first create demand for rental housing then homes.
Earlier this month, The Wall Street Journal reported that Generation X had largely been left out of the housing recovery. That group came into the housing market before the big crash, suffered huge losses and has been considered too gun-shy, or credit-impaired, to make a significant entry back into homeownership.
Nevertheless, the uptick in Gen-X homeownership rates is good news for the market. Industry analysts have said that the lack of Gen-X homeowners created a hole of where entry-level inventory should be because now is the time that this age group should be trading up to larger homes, leaving housing stock behind for first-time buyers. According to a recent Zillow report, entry-level inventory is down 10% compared to last year, with total inventory down 5.9%. The short supply of these starter homes is driving prices up and making them more unaffordable for first-time buyers. According to Trulia, starter home inventory has plummeted 43.6% over the last four years, while their price tags have increased 5.6%.
