Homeownership on the Rebound: Decomposing The Rise of Low-income Homeownership

• In Event: Housing Tenure: Recent Trends and Their Implications

Abstract

In 2023, homeownership among low-income households nearly reached new highs  -- reversing a dramatic decline in the wake of the Great Recession and falling to multi-decade lows. This recent low-income homeownership expansion is particularly noteworthy as homeownership growth stalled among high-income households during the same period, muting the national homeownership growth. This paper studies low-income homeownership trends by performing an Oaxaca decomposition of peak-to-trough homeownership rates to determine how much personal and household characteristics explain the contraction and expansion between 2005 and 2023.  In contrast to prior work examining the 1990s through 2010s period, I find that observable characteristics, notably age, explains around a third of the recent homeownership expansion.  Growing housing affordability and improving housing credit availability appear to be the most likely additional contributing factors to this expansion.

Author

• Erik Hembre, Federal Reserve Bank of Minneapolis
  Presenting Author