A new study from the Federal Reserve Bank of Minneapolis casts doubt on commonly held ideas about how many adults own homes in the United States.
According to the Fed’s research, only about 53% of U.S. adults own homes. That’s well below the commonly cited 65% homeownership rate.
CBS News noted that the traditional homeownership rate, tracked by the U.S. Census Bureau, measures the share of occupied homes in which the owner lives. It said that the new measure from the Minneapolis Fed, called the homeowners-to-population ratio, or HPOP, instead calculates the share of adults who own a home.
In the example of a married couple who own a house and whose adult son still lives with them, the Census Bureau measure classifies the household as owner-occupied, even though the son does not own the property.
CBS said that approach can create an impression that everyone living in such a household is a homeowner. About 14% of U.S. adults live in owner-occupied homes without owning the property, according to the Minneapolis Fed researchers.
All Adult Residents Aren’t Owners
These can include adult children living with their parents, siblings or parents living with adult relatives, or people living with a roommate who owns the property, CBS said.
That means that the commonly cited rate can obscure the fact that more than one in eight U.S. adults live in an owner-occupied home without owning one.
The researchers say HPOP provides a clearer picture by distinguishing between the share of homes occupied by their owners and the share of adults who own property, CBS said.
“We should be in agreement about what it is we’re talking about, and when you hear that the homeownership rate is about two-thirds of Americans, you take that to mean two-thirds of adults are homeowners, which is factually not true,” Erik Hembre, Senior Economist at the Minneapolis Fed and a co-author of the report, told CBS News.
This matters because policies could be improperly designed “if you’re not measuring the right thing” and they’re responding to flawed data, Hembre added.
Barriers to Ownership
Another economist said HPOP also underscores how steep the barriers to homeownership have become.
“It’s a signal of the fact that homeownership is becoming less affordable in the U.S., which we knew in general, but the strength of this phenomenon is more accentuated by the new measure,” Francesco D’Acunto, a Professor of real estate at Georgetown University who wasn’t involved in the paper, told CBS News. “It tells us the problem is even worse than we knew.”
CBS News said that HPOP finds actual homeownership is lower in every U.S. state than previously thought, with the lowest rates in states with high housing prices.
It said that in California, for example, the HPOP is 41.2%, compared to the owner-occupancy rate of 55.9%. In New York, 43.3% of adults own homes, versus 54.3% of New Yorkers who live in owner-occupied housing.
