Since the burst of the housing bubble, the percentage of home ownership has dropped substantially in favor of renters in major metropolitan areas, according to data compiled by New York University’s Furman Center and Capital One Financial in 2015. The shift in all areas of the country has made new apartments hard to find in some areas, while in others, notably Dallas and Houston, job growth fuel demand for new construction and developers have responded. Multi-family construction in these areas has picked up to satisfy younger, well-heeled residents who simply don’t want to be tied down by long-term housing obligations.
That is also the demographic for singles and young entrepreneurs who choose to be at home in the city. Families tend to prefer the suburbs and outlying communities, and ownership statistics reflect that difference.
Rent or Buy?
Of the 11 cities surveyed, only two show homeowner majorities, and even in those two, the percentage of renters is up since the previous survey in 2006. Atlanta checks in with a 49% rental figure, up from its previous 47%, while Philadelphia, with a 2013 percentage of renters at 44% was listed at only about 36% renter-occupied in 2006.
Cities now showing a majority renter population that previously were in the homeowner category include Houston and Washington, D.C., both at 54%, Dallas at 53% and Chicago at 52%. Miami takes the honors for having the highest percentage of renters, at 65%, followed by New York City at 64% and Boston and Los Angeles, both at 60%. San Francisco is the last remaining city on the list, with 57% of its homes renter occupied.
Interestingly, the trend does not seem to discriminate based on the average rental prices, nor does home ownership depend on the affordability of city housing.
Also, the percentage of renter-occupied residential units is up across the board, with vacancy rates also appearing to have little effect on overall home ownership statistics.
Best and Worst Housing Markets
Some cities in the nation do, however, seem to attract buyers rather than renters. They are all hot markets in terms of job growth, and they tend to be smaller cities rather than major metropolitan areas.
Notable on the list of places where you’re not likely to have an easy time finding a home, no matter how qualified you are or how much you’re willing to pay are the San Jose-Sunnyvale Santa Clara, California area. The vacancy rate is this population center, characterized by high tech and high prices, is just two-tenths of one percent. It’s arguably the hottest housing market in the country. Depending on your point of view, it’s either the time and place to buy, or a perfect example of a market to stay away from.
Other hotspots for jobs and home ownership include, in order of lowest percentage of vacancies reported at the beginning of 2016, are Fort Collins, Colo., also at 0.2% of the housing stock, the Manchester-Nashua, N.H. area, sometimes termed “North Boston” or “suburban Boston,” Provo-Orem, Utah, and Lancaster, Penn.
As might be expected, “problem cities” that have been in the news for a variety of reasons are among the top five with housing problems as well. You know the names: Flint as well as Detroit-Dearborn in Michigan, the so-called Rust Belt communities of Youngstown-Warren-Boardman on the Ohio-Pennsylvania border, Beaumont-Port Arthur, Texas and Atlantic City, N.J.
These areas, particularly in the old inner cities, have a wealth of vacant houses just waiting for the wrecking ball. Many of them are aging structures that are not likely to ever be inhabited again, and they are a major problem for their cities. Foreclosure rates are high, the the problem just compounds with time.
What Does the Future Hold?
Whether the current statistics are indicative of a lasting trend toward rental housing or not, it is clear that the character of American cities is in flux. If, as appears to be the case in some cities that are experiencing growth, the city cores once again become vibrant business and cultural centers, then there may be a lasting shift toward younger, more mobile residents in the central cities
Home ownership rates by region have held steady since 2014, according to U.S. Census Bureau data, with no statistically significant change anywhere. The Midwest shows the highest rate of ownership, at slightly over 68%, followed by the South at about 65.5%, and the Northeast, at slightly less than 62%. The lowest percentage of ownership is in the West, with 59% of housing owner-occupied at fourth quarter 2015. That may have something to do with the price of housing in California, although the reasons are not clear in the survey.
Nationwide, 64% of households were owner occupied at the end of 2014, a fact borne out by all the data analyzed, and the long-term percentage of renters, even in the country’s largest city, New York, has steadily declined over the years. In 1970, for example, renters in the Big Apple accounted for 71% of households. In 2013, the percentage rose to 64% after declining to 60% in 2006.
So, according to the analysts, the American dream of home ownership may be different today than it was a decade ago, just as housing type and style has evolved from that available a generation ago. But that doesn’t mean the dream is dead, say the experts. It may just have been delayed.
2 Point Highlight
Of 11 cities surveyed, only two show a majority of home owners over renters and, even in those two, the percentage of renters is up since the previous survey was completed in 2006.
Other hotspots for jobs and home ownership include, in order of lowest percentage of vacancies reported at the beginning of 2016, are Fort Collins, Colo., also at 0.2% of the housing stock, the Manchester-Nashua, N.H. area, sometimes termed “North Boston” or “suburban Boston,” Provo-Orem, Utah, and Lancaster, Penn.
