The number of US homeowners showed an unprecedented eleven-year gain of 11 million between 1994 and 2003, pushing the homeownership rate to an annual record of 66.8%. Yet the homeownership gap between minority and white households has barely improved. In addition, rising home prices and interest rates are threatening affordability. Sustaining the homeownership boom will therefore be difficult unless income growth continues to outrun house price inflation
Record Homeownership Rates
Homeownership rates are up across all regions and across all age groups. The sustained rise in ownership among young households is especially impressive, given the trend toward later marriage that has boosted the share of single-person and non-family households—households that have far lower homeownership rates than married couples (Janet, 2001). Now at the ages when homeownership rates climb the fastest, the baby-busters accounted for nearly 6 million of the owners added between 1994 and 2002 (Tiffany, 2003).
The baby boomers also contributed to growth even though they are at an age when ownership rates rise more slowly. While immigrants have contributed an impressive 15% of the net growth in homeowners over the past three years, the overall homeownership rate of the foreign born has only recently begun to rise. The primary explanation is the growing share of relatively recent immigrants. Foreign-born households tend to be renters for the first several years after arriving in this country, but their ownership rates rise with length of stay.
Minority Ownership Increases
Despite impressive growth in the number of minority homeowners since 1994, the gap between minority and white homeownership rates holds at 25.8 percentage points—an improvement of just over one percentage point. The disparity between black and white rates remains particularly wide. In fact, despite the booming economy and more concerted efforts to reach out to blacks, today’s 26.6% gap reflects....
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