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Homeownership rates fall across state, US

Rising costs, weak incomes, loan rules blamed for decline

An increasing number of people 45 to 64 years old — prime ages for owning a home — are jumping into the rental market.Drew Angerer/Getty Images

The American Dream of home ownership is slipping away for an increasing number of people.

The percentage of US households owning their homes slid last year to 64.5 percent, the eighth consecutive year of declines and the lowest level in two decades, according to a report released Wednesday by the Joint Center for Housing Studies at Harvard University.

In Greater Boston, the ownership rate is even lower: 60.9 percent, down from 64.2 percent prior to the recession, according to the latest data.

The culprits for the homeownership decline are easy to identify: rising home prices, stagnant incomes, tougher lending standards, and a lack of housing construction to meet demand, the report said.


These same trends are driving up demand for rental housing and pushing rents higher — rising nationally at about double the rate of inflation, according to the report.

In Massachusetts, the rising cost of rent is particularly acute for lower- and moderate-income households. More than two-thirds of Massachusetts households earning $30,000 to $45,000 a year spend 30 percent or more of their incomes on rent, compared to less than half nationally, according to the report. One in three households earning $45,000 to $75,000 here devote more than 30 percent of their income to rent, compared to one in five nationally.

"They're getting squeezed," said Chris Herbert, managing director of Harvard's Joint Center for Housing Studies. "More or less, this squeeze is happening across the country."

The center, using data from the US census, assesses the nation's housing markets each year. Homeownership rose steadily during the 1990s, peaking at about 69 percent of US households in 2004. But homeownership began to slide when the last housing boom turned to bust shortly after that.

"This erases nearly all of the increase from the previous two decades," Herbert said, "and the trend does not appear to be abating."


Indeed, an increasing number of people 45 to 64 years old — prime ages for owning a home — are jumping into the rental market, dispelling the notion that it's mostly struggling young people frozen out of the market who are resorting to renting, the report said.

Millennials, those born between 1985 and 2004, are facing their own obstacles to homeownership, particularly high student loan debt, the report notes.

In Boston, the hurdles may be a bit higher. The city's housing costs rank in the top 10 among metropolitan areas, according to the study. The median home price in the Boston metro area, about $390,000 in 2014, was nearly double the national median of $209,000, according to the National Association of Realtors.

The median home price in Greater Boston is more than five times the median income, compared with less than four times nationally, according to the Harvard report.

But some positive trends are underway, the report noted. Fewer home foreclosures are taking place across the nation.

Home construction starts have increased in recent years, rising to just over 1 million last year from 554,000 in 2009, during the depths of the recent recession. But new construction still lags the peak of 2 million housing starts in 2005, the report said.

In Massachusetts, housing permits hit nearly 15,000 units last year, up from 7,725 in 2011, the low point for starts following the downturn, said Guy Webb, executive director of the Homebuilders and Remodelers Association of Central Massachusetts, citing census data. But that's down from the prerecession high of 24,600 units in 2005 and 45,200 housing starts in Massachusetts in 1986, the peak of the 1980s housing boom here, he said.


Home builders mostly blame restrictive zoning regulations in many municipalities for the lack of construction in Massachusetts. "We just aren't building enough homes," said Brad Campbell, executive director of the Homebuilders and Remodelers Association of Massachusetts.

The Harvard report noted that the historically low construction levels here and nationally are contributing to low inventories of homes for sale.

Jay Fitzgerald can be reached
at jayfitzmedia@gmail.com.