The U.S. homeownership rate is currently at about 64% in 2024. The U.S. homeownership rate peaked at about 69% in 2004 and bottomed in 2017 at about 63.5%.
The reason why the U.S. homeownership rate began to decline in late 2004 was due to unaffordable prices and then the collapse in home prices starting in 2006.
The 2008 global financial crisis led to a deep recession, causing millions of homeowners to go underwater, short-sale, or go bankrupt.
Only after nine years since the global financial crisis did the U.S. homeownership rate bottom. Since 2017, the U.S. homeownership rate has continued to rebound to its current percentage of 66% today.
Latest U.S. homeownership rate from 1990 through 2024. Notice how the homeownership rate dipped in 2023 as mortgage rates increased. But now we're past the real estate bottom and prices are likely to march higher as mortgage rates fall.
What Will The U.S. Homeownership Rate Be In The Future?
Although the decline in the homeownership rate from 2004 to 2017 looks pretty steep, it was only about a 6.3% decline from peak to trough. The Y axis matters.
I expect the U.S. homeownership rate will continue to climb back up to peak levels seen in 2004 and 2005 given the desirability of real estate. Real estate is the best asset class for the common person to build long-term wealth.
The average homeowner is roughly 40X wealthier than the average renter for a reason. We're talking an average net worth of over $200,000 for the homeowner and only an average net worth of $5,000 for the renter.
Post-pandemic, we are spending more time at homes. Therefore, the intrinsic value of real estate has gone up. We want home stability in an uncertain and unstable world.
If you are a renter, you could be asked to leave at any time. But not so as a homeowner if you continue to pay your mortgage and taxes.
When Will The U.S. Homeownership Rate Pass Peak Levels?
Given it took about 13 years for the U.S. homeownership rate to go from peak to trough, I expect the U.S. homeownership rate to reach all-time highs by 2030. 2030 would be 13 years since the trough in 2017.
However, due to the increased desirability of homeownership, we could see the U.S. homeownership rate pass its peak level of 69% sooner than 2030. That said, the yield curve is currently inverted and there is the potential for another recession.
If there is another recession, homeownership rates could stall or decline for one or two years. Therefore, it's reasonable to assume the U.S. homeownership rate won't peak until about the year 2030.
Ideally, the U.S. government and society wants the homeownership rate to be as high as possible. The higher the U.S. homeownership rate, the more property tax revenue and buy-in from American citizens. When you own your home, you have an economic incentive to keep real estate values up.
Neighborhoods will improve in desirability due to better upkeep. Schools and public services will be better due to more funding. And overall wealth will increase as more people want real estate prices to increase.
The median home buying age is getting older. However, those who are able to buy homes younger will likely benefit as the trend towards homeownership increases.
Invest In Real Estate For Greater Long-Term Wealth
If you are part of the minority who rent in America, I suggest investing in real estate if you want to build more wealth. Inflation is too powerful of a beast to overcome. With real estate, you benefit from rising rents and property prices.
As the U.S. homeownership rate continues to rise, more money will poor into real estate and lift values. Take a look at my two favorite real estate investment platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. The real estate platform has over 500,000 investors and manages over $3.5 billion.Â
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. If you have more capital, you can build your own diversified real estate fund.
I've personally invested $954,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$380,000.
Both Fundrise and CrowdStreet are sponsors of Financial Samurai and Financial Samurai is an investor in the Fundrise Flagship Fund.
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