The latest data from the US Census Bureau show the homeownership rate in the United States at its lowest level since the bureau began tracking the rate in 1965. As of the second quarter of 2016, the homeownership rate had dropped to 62.9%.

The bursting of the housing bubble is a major contributor to the decline. That said, the rate has actually been declining since 2004 when it peaked at 69.2%. After the bubble burst, the percentage of people who didn’t own a home accelerated.

Many commentators point to the rise in consumer debt or lack of income growth for the downward trend in homeownership. We’re not so sure.

A lot has been said about rising consumer debt, particularly debt tied to student loans. Indeed, student-loan debt has trended higher, rising to $29,000 in 2014 from $18,550 a decade earlier, according to Institute for College Access and Success data. Roughly 70% of graduating seniors graduate with some debt.

Yes, student-loan debt is an issue, but only if it’s out of hand relative to disposable income.  It may not be quite as out of hand as some pessimistic prognosticators lead us to believe.

Consumer debt as a percentage of disposable income stands at 5.5%, where it was 25 years ago. The percentage has actually dropped a full percentage point since 2001. For younger people, student-loan debt might comprise a larger percentage of overall debt, but if the debt is used to fund an education that leads to a marketable degree, it’s really an investment. Researchers at the New York Federal Reserve estimate college graduates earn about $1 million more over their lifetime than those without a degree.

As for income, it’s true: Real wages have stagnated, but they’ve stagnated since 1964. (Real wages are wages adjusted for inflation. Nominal wages, which are unadjusted for inflation, continue to rise.)  But as is always the case when dealing with large averages, meaningful details are frequently lost.

Quality is one meaningful detail. A real hourly wage buys more quality today compared to 1964. For example, televisions of today are not only infinitely superior in every way to televisions of 1964, they’re cheaper as well. Quality also demands a lower percentage of wage income today than in 1964. Real wages might have stagnated over the past 50 years, but you get more bang for your real-wage buck year after year.

Demand more than anything points to a trend reversal. The vast majority of us prefer to own than to rent a home. This preference also resonates with younger adults. Surveys from Fannie Mae continually show that over 90% of millennials are optimistic they will eventually own a home.

In short, we don’t see a problem with the current homeownership rate, because we see the opportunities that will arise when it trends higher. 

Information provided by Jessica Regan.

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