Household income is only one measure of overall economic conditions. Equally important is whether one can get a job, change a job or keep a job.
Changes in economic conditions and consumer access to mortgage financing are also important influences on homeownership. Our decision and ability to buy a home is closely tied to all of these economic factors.
Figure 6 shows the change in the homeownership rate, all other factors held constant, due to changing economic conditions over time. Between 1992 and 2005, the strong economy of the 1990s and the housing boom of the early aughts increased homeownership, all else held equal, by 5.6 percent. The recession that followed the housing boom peak forced the homeownership rate to decline 5.1 percentage points. More recently, improving economic conditions have helped fuel resurgence in the homeownership rate.
The recent economic data for 2015 and 2016 suggests further increased homeownership demand.
Figure 6. Yes, It Is All About the Economy, Stupid.
Year-Over-Year Change in Homeownership Rate (%)
It's hard to predict future economic conditions. However, this analysis shows that a growing economy and rising income levels each play a role in increasing the likelihood of homeownership. While the decisions by many Millennials to delay marriage andpostpone starting a family are currently reducing homeownership demand, there are signs Millennials are increasingly looking to enter the housing market.
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