Thursday, November 07, 2013

Homeownership Falls among Retiring Boomers

It's time for another look at changes in homeownership by birth cohort. By comparing homeownership rates for five-year age groups in the third quarter of 2013 with those in the third quarter of 2008, cohort decisions regarding homeownership can be teased out of Census Bureau data.

Such a comparison reveals the expected rise in homeownership among young adults as they age into their thirties and early forties. Cohort homeownership rates decline slightly (by 0.4 to 0.9 percentage points) as householders age into their late forties and fifties. The largest and most surprising decline in homeownership rate by cohort is among householders aged 60 to 64—retiring baby boomers.  

In the third quarter of 2013, only 76.8 percent of householders aged 60 to 64 owned their home. Five years earlier when this cohort was aged 55 to 59, their homeownership rate was a larger 79.3 percent. Between 2008 and 2013, the homeownership rate of the cohort (boomers born between 1949 and 1953) fell by a substantial 2.5 percentage points.

Homeownership rates by five-year age group have been calculated by the Census Bureau since 1982. In 2012, for the first time, the 78.6 percent homeownership rate of 60-to-64-year olds fell below what would round to 80 percent. The 2013 data show the downward trend picking up speed as boomers make decisions about their retirement years. In a MacArthur Foundation study released earlier this year, a substantial 49 percent of homeowners aged 50 to 64 said they would be willing to consider renting in the future. Maybe that explains the homeownership decline.

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