65% Of Americans Own A Home. Expect That Number To Crash Soon

As we like to do at The Juice, let’s look at some data to help us read the writing on the wall. 

• As of Q2/2024, the home ownership rate in the United States is 65.6%. 
• That’s down slightly from 2023’s numbers, which hovered around 66%. 
• While the current 65.6% figure is down from the recent Q2/2020 high of 67.9%, it’s up considerably from the recent Q2/2016 low of 62.9%. 

Of course, you can make positive or negative projections based on this data. While neither would be crazy, we have a difficult time being optimistic. 

The Juice spends a fair bit of time chronicling our nation’s housing crisis. When you consider the data — and our interpretation of it — alongside home ownership rates, we think we have good reason to be super pessimistic. 

In fact, as we indicated a couple weeks ago, we think more people — from politicians to the media — should be sounding the alarm. For goodness sake, they stoke the fire on social issues and such that don’t impact a majority of Americans, yet there’s barely any angst, agitation or ire on the biggest  monthly expense most of us have no choice but to meet.

Why?

Well, because—

…56.2% of outstanding mortgage loans have an interest rate under 4% and 74.6% are under 5%. Just 15.8% are over 6%.  

These are the folks all set — or close to it — on housing. 

It should come as no surprise that a majority of homeowners are older. Consider the following breakdown of home ownership rates by age.

• 65 and older: 79%
• 55-64 years old: 75.7%
• 45-54 years old: 70.5%
• 35-44 years old: 62.6%
• 35 and younger: 38.6%

The under 35 home ownership rate was as high as 43% in the 2004-2005 time frame. It hit a recent low of 34.5% in 2016. After rebounding to 39% in the early 2020s, we’re at our current figure of 38.6%. 

Expect that number to decline even further. And, as the older generations die off, expect the home ownership rate across age groups to take a serious hit. 

Why? 

Because—

• To be able to afford a home that costs $750,000 in the United States of America today, you need to earn more than $187,000 annually. 
• On a freaking $500,000 house, you need to make more than $125,000. 

We’re talking about mortgage payments in those two scenarios of between $3,000 and $5,000 a month. 

That’s pure insanity. 

And we think it’s only going to get worse—

If interest rates continue to fall — and even if they don’t — buyers will be coming off of the sidelines over the next year or two. Some because they have no choice. They have waited long enough and need to make a move. Many of these people will be sitting on a ton of cash, ready to make a big down payment or even pay cash in the country’s perennial hot markets. Others will be doing it because interest rates finally hit their number. 

Like so many things in America, home ownership will become a privilege reserved for the relatively super wealthy among us. 

Even if you could stretch as a mere money mortal to make it happen—

To look yourself in the mirror at age 30 or 35 and commit to a 360-month obligation so hefty, knowing full well that there’s a good chance you’ll be house rich/cash poor as you live to work for the remainder of your prime years. 

Who wants to put themselves under that type of financial stress? 

Even if you make it through, you’ll be in no position to slow down until you’re in your 60s. 

The Juice can only think of two saving graces:

• You kicked ass in the stock market.
• You got some of that wealth the baby boomers are reportedly transferring. 

In these cases, maybe you never had to buy the house. You inherited it. Or you had enough cash to pay cash or make a huge down payment. So you have no or a lower monthly mortgage, which provides some nice breathing room. 

Congratulations if you or somebody you know falls into one of these categories. 

For the rest of us, the writing is on the wall. And it’s not good. From a housing affordability perspective, you have to worry about the next generation. You have to worry that we really will be a nation of renters. Which isn’t necessarily such a bad thing. But — guess what? — as we’ll detail in tomorrow’s Juice, the rental market is a bit of a mess and that doesn’t bode well for Gen X, the millennials and Gen Z’s financial present or future. 

The Bottom Line: Unless there’s a massive landscape shift, The Juice thinks home ownership rates will plummet in the next ten years. Given the numbers, we just don’t see how it doesn’t. We think we’ll see large numbers of young people leave the country for more affordable pastures. 

This doesn’t bode well for an American dream built around owning your own home and attendant consumption. Consider not only home ownership rates, but the prohibitive cost of becoming a homeowner as clear signs the American dream is at risk of dying a painful death. 

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