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Republican presidential nominee Donald Trump has often used economic statistics to attack President Barack Obama’s administration, and he did the same following the Democratic National Convention.
"American homeownership rate in Q2 2016 was 62.9% - lowest rate in 51yrs," Trump tweeted July 30, 2016. "WE will bring back the 'American Dream!"
We haven’t fact-checked Trump on this particular statistic before, so we took a look at the data.
On the numbers
The "homeownership rate" is defined as the proportion of occupied households actually owned by those living there. A Census Bureau report released last week contains Trump’s 62.9 percent figure, referring to the non-seasonally-adjusted homeownership rate.
Trump’s tweet referred to Federal Reserve Economic Data from the Federal Reserve Bank of St. Louis. His math checks out — the homeownership rate (again not seasonally adjusted) was last this low in 1965, 51 years ago.
As the graph shows, the rate grew steadily since 1995, reaching a 69 percent peak in 2005. But it has been in decline ever since.
Other studies paint a similar picture, such as one finding the share of first-time home buyers in 2015 was 32 percent, the lowest since 1987.
So Trump’s data is accurate, but there are some caveats.
Experts told us millennials are largely to blame for the dropping homeownership rate, but it’s as much their lifestyle preferences as it is a sign of a poor economy.
Many millennials graduated college at the onset of the 2008 recession, meaning more people chose to live with their parents, said Adam DeSanctis, economic issues media manager at the National Association of Realtors. One survey identified rising student and credit card debt, as well as difficulties saving for down payments, as key deterrents.
At the same time, lifestyle choices — such as marrying later in life, going to college and having fewer children — all contribute to lower levels of homeownership, DeSanctis said. Jed Kolko, an independent housing economist, argues that lifestyle shifts, not financial variables, are primarily responsible for more youth living with their parents.
Many millennials have expressed little desire to own a home, said Byron Studdard, a financial adviser at Studdard Financial, which focuses on estate and retirement planning. Witnessing the financial crisis and their parents’ difficulties paying off their mortgages, as well as general desire to be mobile, serve as deterrents.
Studdard also cautioned against comparisons to 1965, because that was a different generation that was more likely than millennials to view homeownership as the first step to prosperity.
"I’m not sure the homeownership rate is necessarily going to be a good indicator of if America is great again, like it was when we had the World War II generation," Studdard explained.
How big a problem is it?
While the falling homeownership rate is not a positive, economists we spoke to disagreed on how problematic it was.
In a New York Times article, Kolko wrote that the homeownership rate is misleading because it fails to capture renters.
He said the "headship rate" — the percent of adults heading a household — is a better figure that captures both owners and renters. Increases in the headship rate still stimulates household construction, he said.
That rate, according to the Census Bureau’s 2015 Current Population Survey, has been going up as of 2013.
Slight decreases in owner-occupied households were outpaced by increases in renter households, said Ralph McLaughlin, chief economist at Trulia, a company providing real estate information for buyers and sellers. Yet renter-households still boost demand for construction and other goods, he said.
The comparative benefits of renting versus owning a home are still disputed, said Aaron Terrazas, a senior economist at Zillow, an online real estate database company.
On the other hand, DeSanctis said the low homeownership rate poses problems for the American economy. Owning a home has typically been a major source of investment for the middle class, and renting does not fulfill the same investment function.
"As a result, the country has become more unequal in recent years as rising home values have benefitted current homeowners greatly at a time more people are renting and facing escalating rental prices each year," he said.
He said Trump has a point in identifying the troubles people have buying a home, especially as rising rental rates and housing prices surpass income gains. The biggest housing losses immediately after the recession affected middle-aged adults, Terrazas said.
Trump said homeownership is at its lowest since 1965. The numbers back him up.
However, there are some caveats. Some of the decline is due to lifestyle, and not economic, changes. In addition, experts told us the housing market is not in as dire straits as one statistic suggests.
On balance, we rate this claim Mostly True.https://www.sharethefacts.co/share/f520daeb-1a93-4cbe-9abf-10d1f36a51ee
Personal tweet, Donald Trump’s Twitter account, July 30, 2016
Census Bureau, "Definitions and Explanations"
Census Bureau, "Residential Vacancies and Homeownership in the Second Quarter 2016," July 28, 2016
Federal Reserve Economic Data, "Homeownership Rate for the United States," accessed August 2, 2016
National Association of Realtors, "First-time Buyers Fall Again in NAR Annual Buyer and Seller Survey," November 5, 2015
National Association of Realtors, "NAR Generational Survey: Millennials Increasingly Buying in Suburban Areas," March 9, 2016
Jed Kolko, "Why Millennials Still Live With Their Parents," November 23, 2015
The New York Times, "Why the Homeownership Rate is Misleading," January 30, 2014
Interview with Ralph McLaughlin, chief economist at Trulia, August 2, 2016
Interview with Byron Studdard at Studdard Financial, LLC, August 2, 2016
Email interview with Jed Kolko, independent economist, August 2, 2016
Interview with Adam DeSanctis, media manager at the National Association of Realtors, August 1, 2016
Email interview with Adam Terrazas, senior economist at Zillow, August 2, 2016
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