Although the real estate market seems to be recovering, with interest rates still low and prices reaching pre-Great Recession levels, a recent study conducted by the Pew Research Center indicates that homeownership has reached a 20-year low. For certain demographics, levels even go below where they were in 1994 – the time when home values began to increase up until the Great Recession.

Specifically, just 63.5 percent of households owned their homes in the third quarter of 2016, down from 69 percent in 2004. Yet, these declines aren’t uniform across the board. Census Bureau and mortgage loan data indicates that descents are steeper for young adults, African-Americans and low-income households. At the same time, fewer rental households are transitioning to homeownership, fueling the lack of growth.

What could be the reason for these changes? Data from Pew indicates:

1. Renters Want to Buy – But They Don’t Have the Means

Approximately 72 percent of all renters surveyed would like to purchase a home in the future, but several factors directly and indirectly hold them back. Stricter lending standards, particularly for credit, can put financing out of reach and higher prices make it harder for those with fewer assets to save up for a larger down payment.

When comparing the present day to pre-Great Recession years, how potential buyers get financing squeezes out lower- and middle-income demographics. For instance, 32 percent of lending to African-American borrowers involved subprime loans in 2004. Additionally, data from the Federal Reserve indicates that for younger lower and middle-income buyers, financial assets have declined.

On a positive note, for those who can make the jump to homeownership, buyers are only taking out one loan – as opposed to a mortgage and down-payment financing – and fewer borrowers are defaulting.

2. Changing Demographics

Homeownership by demographics has also evolved since 1994. Back then, the typical head of the household was 45 years old. As of 2016, the average homeowner is now 51.

Regardless of age, homeownership for African-Americans declined from 42.3 percent to 41.3 percent in 2016. Similarly, the number of Hispanic households dropped five percent – from 49.7 percent in 2004 to 47 percent in 2016.

3. Fewer Low-Income Owners

Furthermore, fewer low-income Americans – classified as under $44,000 for a family of three – regardless of age or race are homeowners. In fact, homeownership rates by income saw the sharpest drop over the past 10 years.

Whether you’re a first-time buyer or an owner looking to upgrade to a bigger home, find the perfect Central Connecticut property for you from By Carrier’s diverse assortment of communities. To learn more about our custom homes, give us a call today.

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