Research Report Headship and Homeownership: What Does the Future Hold?
Laurie Goodman, Rolf Pendall, Jun Zhu
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Household formation and homeownership are milestones that can be measured as a series of transitions over the course of one’s life: young people generate new households, and older people move out of them. But since the Great Recession, the traditional patterns have been changing. In the next 10 or 15 years, will young adults want to own houses? If they do, will they be able to afford them?

Key findings

  • For the next 15 years, new renters will outpace new homeowners. The total number of homeowners will grow, but the homeownership rate will continue to drop as more people of all ages—but particularly millennials—choose renting over owning. When millennials have reached their prime home-buying age in 2030, only 38 percent will own homes compared with 46 percent of baby boomers in the 1990s.
  • The headship rate—the pace at which people create new households—is declining further. The rate peaked in 1980, and it's been trending down since then for people in every age group except the oldest Americans. It will continue to decline into 2030.
  • The overwhelming majority of new households formed from 2010 to 2030 will be nonwhite. An estimated 43 percent of these new households will be Hispanic, while only 18 percent will be white.
  • The overwhelming majority of new homeowners will also be nonwhite. More than half the new homeowners will be Hispanic. Less than 7 percent will be white. The gap between Hispanics' and African Americans' homeownership rates will grow. African Americans were hit hardest in the housing crisis and will see a large decline in their homeownership rates regardless of economic growth.
  • The number of senior households will expand dramatically from 2010 to 2030. More than half the growth will be households over 65. By 2030, 74 percent of householders over 65 will be white, compared with 56 percent of those under 65.

Key numbers

  • From 2010 to 2030, there will be 4 million more new renters than homeowners; 22 million new households will need homes to rent or buy—13 million will rent, 9 million will buy.
  • By 2030, the homeownership rate will have dropped to 61.3 percent from 65.1 percent in 2010.
  • Of the 11.6 million net new households that will form from 2010 to 2020, 77 percent will be nonwhite; of the 10.4 million new households that will form from 2020 to 2030, 88 percent will be nonwhite.
  • Hispanics' homeownership rate will increase from 46 percent in 2000 to 48 percent in 2030.
  • African Americans' homeownership rate will drop from 46 percent in 2000 to 40 percent in 2030.
  • The homeownership rate for 35- to 44-year-olds will drop from 67.4 percent in 1990 to 55.2 percent in 2030.

Policy recommendations

  • Encourage building of suitable rental housing to meet the growing demand for all age groups.
  • Expand credit availability in the mortgage market to spur homeownership—particularly among African Americans—and reduce the growing shortage of rental housing.
  • Develop policies that allow seniors to stay in their homes as they age, as most want to do.
Research Areas Economic mobility and inequality Wealth and financial well-being Aging and retirement Families Social safety net Race and equity Immigration Housing finance Housing
Tags Economic well-being Federal housing programs and policies Asset and debts Family and household data Racial and ethnic disparities Housing markets Immigrant communities demographics and trends Tracking the economy Housing and the economy Homeownership Multifamily housing Families with low incomes Housing affordability Wealth inequality Immigrant communities and racial equity Racial barriers to accessing the safety net Racial barriers to housing Racial homeownership gap Racial inequities in economic mobility Financial stability
Policy Centers Housing Finance Policy Center