A Renter or Homeowner Nation?

16 Pages Posted: 22 Jan 2016 Last revised: 11 Feb 2016

See all articles by Arthur Acolin

Arthur Acolin

University of Washington - College of Built Environments

Laurie S. Goodman

The Urban Institute - Housing Finance Policy Center

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Date Written: January 22, 2016

Abstract

This article performs an exercise in which we identify the potential impact of key drivers of home ownership rates on home ownership outcomes by 2050. We take no position on whether these key determinants in fact will come about. Rather we perform an exercise in which we test for their impact. We demonstrate the result of shifts in three key drivers for home ownership forecasts: demographics (projected from the census), credit conditions (reflected in the fast and slow scenarios), and rents and housing cost increases (based on California). Our base case average scenario forecasts a decrease in home ownership to 57.9 percent by 2050, but alternate simulations show that it is possible for the home ownership rate to decline from current levels of around 64 percent to around 50 percent by 2050, 20 percentage points less than at its peak in 2004. Projected declines in home ownership are about equally due to demographic shifts, continuation of recent credit conditions, and potential rent and house price increases over the long term. The current and post WW II normal of two out of three households owning may also be in our future: if credit conditions improve, if (as we move to a majority-minority nation) minorities' economic endowments move toward replicating those of majority households, and if recent rent growth relative to income stabilizes.

Keywords: Homeownership Rate, Future Housing Demand, America 2050

JEL Classification: R21, R31

Suggested Citation

Acolin, Arthur and Goodman, Laurie S. and Wachter, Susan M., A Renter or Homeowner Nation? (January 22, 2016). Cityscape, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2720328

Arthur Acolin (Contact Author)

University of Washington - College of Built Environments ( email )

224 Gould Hall
Box 355726
Seattle, WA 98195
United States

Laurie S. Goodman

The Urban Institute - Housing Finance Policy Center ( email )

2100 M Street NW
Washington, DC 20037
United States

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

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