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U.S. homeownership drop seen bottoming - Harvard study
June 16, 2017 / 2:08 PM / 6 months ago

U.S. homeownership drop seen bottoming - Harvard study

June 16 (Reuters) - The fall in U.S. homeownership may have reached a bottom following 12 years of decline on signs of rising demand and supported by wage growth, a report from the Joint Center for Housing Studies of Harvard University released on Friday showed.

But the cost of housing remained heavy burden for many Americans, according to the latest annual study.

In the first quarter of 2017, the homeownership rate was 63.6 percent, flat from two years ago, according to the report.

“Early indications in 2017 suggest that the upturn is continuing,” Harvard researchers wrote.

The homeownership rate hit 62.9 percent in the second quarter of 2016, which was the lowest since 1965.

Families that own homes increased by 280,000 in 2016, the biggest rise since 2006, but they were dwarfed by the growth in renters which rose by 600,000 last year, the Harvard study showed.

Based on the assumption that the homeownership rate will stabilize at current levels, the number of families that own homes could grow by 8.9 million in 2015-2025, while the number of renters could increase by 4.7 million.

On the other hand, if homeownership rate were to decline further, the number of homeowner households would rise by 4.9 million by 2025 and renter households would grow by 8.7 million in 2015-2025.

Meanwhile, the cost for shelter remained high for many U.S. families, albeit the number of them has declined modestly for five straight years, Harvard researchers said.

Based on the 30-percent-of-income affordability standard, the level of cost-burdened households fell to 38.9 million in 2015 from 39.8 million in 2014, they said.

Those families which were severely burdened or paid more than 50 percent of their incomes for housing slipped to 18.8 million in 2015 from 19.3 million in 2014.

Severely burdened renters stood at 11.1 million in 2015, up by 3.7 million in 2001, while severely burdened homeowners totaled 7.6 million, 1.1 million higher than levels seen in 2001, the study showed.

Based on income, 70.3 percent of the poorest families, or those earning less than $15,000 annually, spent more than 50 percent of their wages on shelter.

On a geographical basis, 45 percent of renters in U.S. metro areas could afford the monthly payments on a median-priced home in their area, while in several high-cost metro areas of the Pacific Coast, Florida, and the Northeast, that share is less than 25 percent, according to the study. (Reporting by Richard Leong; Editing by Chizu Nomiyama)

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