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Homeownership Progress Declines in 2014, Index Shows

saving-homesHomeownership may have declined in 2014, but there are other trends and factors such as marriage and children, education, demographics, and lifestyle that influence how consumers operate in the market.

First American Financial Corp., a global provider of title insurance, settlement services, and risk solutions for real estate transactions, released their inaugural First American Homeownership Progress Index (HPRI) Tuesday, which fell to 67 in 2014, down 1.6 percent from 68 in 2013.

The index, which monitors homeownership rates and the underlying demographic and economic factors that influence the probability of homeownership at national and state levels over time, is down 7 percent from the homeownership peak in 2005.

On a brighter note, although homeownership is down from the peak level, it is 7 percent above the low point set in 1994, First American reported.

“While, nationally, the Homeownership Progress Index has fallen in the last year, it is important to note the trends and relationship between the underlying factors that influence homeownership rates,” said Mark Fleming, chief economist at First American.

He added, “Historically, higher rates of marriage and households with more children lead to higher homeownership rates. In addition, the higher the level of educational attainment, the higher the homeownership rate. It is important to monitor these factors and compare them over time and across geography to better understand homeownership progress. Demographic factors and lifestyle and economic choices all influence the homeownership rates, which can vary dramatically over time and across states.”

During 1990 and 2014, First American determined that homeownership levels rose the most in Washington, D.C., (155.0 percent), Colorado (45.0 percent), and Alaska (36.0 percent). The states with the largest decline in homeownership include Tennessee (-12.6 percent), Utah (-11.8 percent), and Arkansas (-11.3 percent).

Since 1990, post-secondary education has also improved among households more than 100 percent in all states. Mississippi, Tennessee, and West Virginia have had the greatest increases in educational attainment since 1990, while Arizona, Washington, and Wyoming had the least improvement.

One particular factor holding back homeownership is the decrease in children per household from 1990 to 2014, with the largest declines recorded in Washington D.C. (-77.0 percent), Vermont (-72.8 percent), and Maine (-72.3 percent).

“While homeownership progress declined between 2013 and 2014, progress varies across states,” Fleming said. “Underlying the changes in progress, however, are improving income levels, decreasing racial and gender inequality, and increasing educational attainment, which all correlate with growing homeownership rates. In contrast, trends in lifestyle choices, such as delaying marriage or having fewer children, are impeding homeownership progress in the short-term. When these traditional homeownership lifestyle trends increase, demand for homeownership will follow.”

Click here to view the full Homeownership Progress Index.

About Author: Xhevrije West

Xhevrije West is a writer and editor based in Dallas, Texas. She has worked for a number of publications including The Syracuse New Times, Dallas Flow Magazine, and Bellwethr Magazine. She completed her Bachelors at Alcorn State University and went on to complete her Masters at Syracuse University.
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