Washington - The housing bust turned many homeowners into renters.
Families that lost their homes to foreclosure went back to renting, and they'll probably stay renters (if not for good) for as long as it takes their credit - and their confidence - to recover.
As a result, the national homeownership rate has dropped since the bubble's peak in 2005 by about five percentage points. That decline, though, has been concentrated among certain groups: Hispanics, men, older millennials, and people living in certain unlucky corners of the country.
These demographic groups are the most likely to have “lost the American dream”, as an analysis by the housing website Trulia puts it. The renter rate is up in every large metropolitan area in the country since 2006, according to data from the American Community Survey (the study looked at the 50 largest metro areas, minus a handful with insufficient data). In the areas studied, the rental rate has risen the most for these groups. The Hispanic renter rate climbed by 8.7 percentage points.
The metro areas with the biggest renter gains were, not surprisingly, those that also were hit hardest by the housing bust. The biggest jumps occurred in Las Vegas, Phoenix and parts of Florida including Miami and Fort Lauderdale. In Las Vegas, the share of households renting rose by nearly 10 percentage points.
It is unlikely that all these groups will return to their 2006 homeownership rates, because homeownership has been declining for long-term demographic reasons that predate the bubble (young Americans, for instance, have been marrying and having children later). And we probably do not want to view the homeownership rate at the height of the bubble as a “natural” level. It is important to distinguish, though, that homeownership is not receding equally for everyone.
Incidentally, the upturn in rental rates also helps explain why rents where you may be living have been rising.