Homeownership Still on the Back Burner
Owner-occupied homes continue to make up a lower share of households in the country, and the trend can have a ripple effect, either positive or negative, on the rest of the housing industry.
According to U.S. Census data, the homeownership rate fell to 63.4 percent in the second quarter of 2015, representing the lowest mark in nearly 50 years. The rate hit its peak at 69.2 percent over a decade ago.
Patrick O'Keefe, director of economic research at CohnReznick in Roseland, said a drop in the homeownership rate, understandably, serves as an indication that the demand for owner-occupied housing is declining.
"That would typically translate into less construction, less sales of the materials that go into a house, the appliances that people buy," he said.
And this drop in demand, slowly but surely, adds to the number of empty homes lining New Jersey's neighborhoods, a problem already made worse by the state's highest-in-the-nation distressed mortgage rate.
The homeownership rate in New Jersey hit its bottom, for now, in the first quarter of 2015, clocking in at 62.3 percent. The next quarter saw a slight uptick to 63 percent, still a far cry from the state's peak of 71.3 percent in early 2005.
O'Keefe noted if people aren't buying, they are renting. After all, the homeownership rate is simply the percentage of occupied homes that belong to owners. The rest fall on the renter side.
"As we've seen in New Jersey, even though the construction of single-family homes has not recovered much at all…the construction of multifamily housing, apartment buildings, has really picked up," he said. "So far this year, about 70 percent of all the housing construction is multifamily construction."
Still, there appears to be an inadequate supply of rental housing. Due to the imbalance, rents have been climbing quite steadily over the years. In April, commercial property tracker Reis Inc. projected a 3.3 percent spike in rents this year.