Homeownership Remains Low Despite Decreasing Burden of Owning

The landscape of homeownership has undergone significant changes in recent years: The homeownership rate has declined, but so has the cost burden of owning a home. Both of these trends are most prevalent among young homeowners, according to a recent ""report"":http://www.fanniemae.com/resources/file/research/datanotes/pdf/housing-insight-1112.pdf from ""Fannie Mae."":http://www.fanniemae.com/portal/index.html

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The national homeownership rate has declined in each of the past four years, according to the most recent Census data, which extends through 2011. The 2011 homeownership rate of 64.6 is 2.6 percentage points lower than the 2007 rate.

The decline among those 25 to 44 years of age is more than twice the overall decline.

This shift, which Fannie Mae attributes to the Great Recession, comes after a decade of steady homeownership increases in which young households played a major role.

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Despite the recent declines in homeownership, the cost burden of owning a home decreased in 2011 and has ""fallen substantially for young owners during the last four years,"" according to Fannie Mae.

When measuring housing cost burden, analysts often look for households paying more than 30 percent of their gross income in housing costs, which analysts define as rental or mortgage payments combined with utility spending.

In 2011, the percentage of homeowners who fell into this category decreased by about one percentage point. In contrast, the number of renters in this category grew.

The percentage of 25 to 44 year-old renters who paid more than 30 percent of their gross incomes on housing costs rose 4 percentage points between 2007 and 2011.

In the same timespan, the percentage of homeowners of the same age who paid more than 30 percent of their incomes on housing costs declined by 5.8 percentage points.

Rising affordability among younger homeowners can be attributed to low mortgage rates and perhaps ""exits from homeownership by households who had high and unsustainable housing cost burdens,"" Fannie Mae stated in its report.

Another factor is tightening mortgage standards, which ""may have also helped to create a cohort of young homeowners who have housing costs that are better aligned with incomes,"" according to Fannie Mae.

The report also noted growth for the single-family rental industry, which has attracted former homeowners who may be locked out of the market due to a foreclosure.