Personal Finance

A Foolish Take: U.S. Homeownership Is at a Multidecade Low

A line chart tracing the homeownership rate in the United States.

The housing bubble was not caused solely by people who bought homes to speculate on rising real estate values. It was also fueled by an increase in the homeownership rate, a trend that has since more than reversed itself.

From 1985 to 1995, approximately 64% of American households owned the home they lived in. This increased to 69% at the peak of the housing bubble in 2005, but it has fallen steadily since. The national homeownership rate in the United States today is 63.5%. The last time it was this low was three decades ago.

A line chart tracing the homeownership rate in the United States.

Data source: YCharts.com. Chart by author.

What caused the decline? According to Harvard University's Joint Center for Housing Studies, it happened due to elevated foreclosure rates throughout the Great Recession, combined with weak income growth and delayed marriage and childbearing among younger households in the years since.

It remains to be seen whether this represents a permanent shift in Americans' perspectives on homeownership. But in the meantime, given the size and importance of the housing market, this goes a long way toward explaining the tepid recovery that's taken place following the most significant economic event to hit the United States since the Great Depression.

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