Homeownership Rate in U.S. Fell During ‘80s : Economy: Census study notes first decline since Depression. Mortgage rates, rising prices are blamed.
In the past decade, the percentage of U.S. residents who own their homes declined for the first time since the Depression, the government reported Friday.
The nationwide homeownership rate dropped from 65.6% in 1980 to 63.9% in 1989, according to a U.S. Census Bureau study.
The report also offered a six-year review of homeownership in the 50 states and a four-year look back at the nation’s largest metropolitan areas. In California, the report showed that the homeownership rate is 53%--about the same as in 1984.
Since 1986, however, the percentage of homeowners declined by about 1% in Los Angeles and Long Beach, where homeownership now is about 47%. In Orange County, homeownership dropped 4%, to 53%; in San Diego, it is 49%, a decline of 4%; in San Francisco, it rose almost 4%, to 52%.
Economists blame the national decline on high mortgage interest rates in the early 1980s and on a surge in home prices later in the decade which outstripped increases in personal income.
“Even though we don’t have those 18% interest rates anymore, we continue to have an affordability problem because many people, especially young people starting out in the work force, can’t come up with down payments,” said David Berson, chief economist for the Federal National Mortgage Assn.
Married couples under 25 experienced the sharpest decline in homeownership over the past decade. In 1980, more than 32% of those young couples owned their homes. Today, fewer than 28% of them are homeowners, according to the Census Bureau report.
Robert R. Callis, author of the report, and other experts attribute the drop in homeownership to the proliferation of a new kind of household, one made up of young, unmarried people who could not afford their own homes.
“Contributing to the overall decline,” wrote Callis, “was a larger increase in non-family households compared to family households. . . . A smaller portion of non-family households own homes than do family households.”
Despite the decrease in the rate of homeownership, the Census Bureau found that the number of homeowners increased from about 54 million to nearly 60 million.
But for the first time in 50 years, the ratio of owner-occupied homes to all occupied housing has dropped.
The Northeast is the only part of the country where the rate of homeownership increased over the past decade, rising by slightly more than 1%. The South experienced the sharpest decline, nearly 3%. The Midwest dropped by 2.1% and the West by 2.2%.
During the past six years, states showing the sharpest drops in homeownership were Alabama, Colorado and Missouri--all down about 6%. With increases of about 4%, Hawaii and Wisconsin showed the greatest growth in homeownership.
Tom Holloway, chief economist for the Mortgage Bankers Assn., said Friday that even though mortgage interest rates are way down from the record highs set in the early 1980s, they stayed higher than they were in the 1970s and posed an obstacle to homeownership throughout the past decade. According to Holloway, the average home mortgage rate in the 1980s was 11.8%, three points higher than the 1970s average.
In Southern California, experts blame the decline in homeownership on a surge in prices, mainly between 1985 and 1988, that set median home costs beyond the reach of many buyers.
“Only about 15% of the people in L.A. can afford the median home price in this area,” said Richard Peiser, director of the Lusk Center for Real Estate Development at USC.
Peiser said several other factors contribute to the high cost of homes locally. He said that local fees exacted from developers add up to $26,000 to the cost of new houses. Home prices have also been affected by the region’s rapid growth, as the demand for housing has outpaced the supply. And Peiser also pointed to the role real estate speculation has played in driving up home prices.
“People have been willing to pay a higher premium for houses because of their expectation that it will prove to be a better investment than other things they might put their money in,” he said.
Many real estate experts believe that as the population ages and young families make more money, the rate of homeownership will start to rise again.
“I think the homeownership rate will increase in the ‘90s,” said Holloway. “The baby boomers will be growing into their 40s and 50s. In the life cycle of things, that’s when people start making serious money.”
The California Assn. of Realtors reported this week that sales of existing homes rose by 2.6% in November over October--the first monthly back-to-back increase since last February.
HOMEOWNERSHIP RATES
Following are homeownership rates for the largest communities in California. During the past four years the rate of homeownership across California has stayed virtually the same. However, it has declined in Los Angeles-Long Beach and several other Southern California communities. The following figures represent the percentage of all households that are owner-occupied.
AREA 1986 1989 Los Angeles-Long Beach 48.3% 47.4% San Diego 53.6% 48.7% Anaheim-Santa Ana 57.3% 52.9% San Bernardino-Riverside 65.9% 65.3% Oakland 57.0% 56.2% San Francisco 48.7% 52.3% Sacramento 54.3% 51.7% San Jose 50.9% 63.4%
Homeownership rates for the United States and selected regions. Over the past 10 years the rate of home ownership has declined across the U.S.--except in the Northeast--for the first time since the 1930s.
Year United States Northeast Midwest South 1989 63.9% 62.0% 67.7% 65.9% 1980 65.6% 60.8% 69.8% 68.7%
Source: U.S. Bureau of the Census
