Why is Homeownership Declining in Metros?

Owning a home might be the American Dream, but a recent Trulia report on homeownership trends between 2000 and 2016, shows that there has been a sharp decrease in homeownership in some of the largest cities in the country.

Trulia analyzed census data for this report from 2000 to 2016 collected every decade. This time period is quite rich for the analysis since it has seen the complete cycle -- expansion, recession, and recovery. While 2004 marked a boom with the highest homeownership rate of 69.2 percent,  it showed a bust with homeownership falling to 62.9 percent.

The biggest decrease in homeownership rate was recorded for Glendale, Phoenix from 92.6 percent in 2000 down to 50.5 percent in 2016. A major reason behind this enormous slump is the construction of new apartment units.

The highest switch from renting to homeownership is in Georgia Tech neighborhood in Atlanta (ZIP code 30313). This change can be attributed to average household income that increased from 13.1 percent in the year 2000 to 32.5 percent in 2016.

Upon careful study of homeownership data, Trulia noted that not only are there visible homeownership patterns within the states and cities but there are also patterns to be observed within ZIP codes. For instance, New York and Houston showed ownership trends dropping in certain zip codes while picking up in others. The overall homeownership rate in the two states is fairly close to that in 2000.

There are two major factors that define changes in homeownership pattern – household income and family dynamics. In smaller areas such as North San Jose, Riverview, St. Louis and Maryvale, Phoenix, the income increase shows a gap of average 6.8 percent when compared to their metropolitan surrounding areas.

Another key factor that should be taken into account when predicting household trends is the type of new construction – multifamily or single family. North San Jose and Maryvale also comprise of a large number of multifamily units which accounts to lower homeownership.