For most Americans, owning a home is now a distant dream | Hacker News Reader

For most Americans, owning a home is now a distant dream

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45 pointsgamechangr29 comments

The headline is correct. The current homeownership rate in the United States is 65.5%. For most Americans, owning a home is a reality, not a dream.

That rate hasn't varied much over the years. Between 1965 and today, it has never been below around 63% or above around 69%.

-- https://fred.stlouisfed.org/series/RHORUSQ156N

I'm always curious about the reported 'homeownership rate'. As far as I'm aware, this is actually the 'living in an owner-occupied home rate'. It includes adults living with parents while saving for a deposit, housemates of a homeowner, etc.

Is there a truer measure of home ownership?

I'd say number of privately owned residences / (number of unmarried adults + number of married couples) would be a better figure. What you really want is the number of unique owners among all owned residences, not just the number of owned residences but that's probably harder to get and I suspect that the mean number of homes owned per homeowner is pretty close to one anyways.

You have it a little off. This is based on census data where they literally just ask "does the owner of this residence live here?" and "does anyone live here?". The "homeownership rate" is just the yes's to the first question divided by the yes's to the second question. So, by definition, this excludes homeless people, people living in illegal dwellings and counts 7 roommates sharing a single apartment as one "non-owner-occupied household". Also, this is based on randomized legally required self-reporting. I'd imagine there is a skew towards people who are stable enough to own a home among the people who respond.

People assume it's "percentage of people who own a house", but it's only about the houses themselves.

As to a better measure, a simple better measure is to look at the ages involved. In 1982, 70% of household based around 35-45 were owner-occupied household. By 2021 that number was 60%. It was pretty much a straight line down. Meanwhile, older people saw that rate continue to level off or even grow. Hence, even the flawed data shows that the trend is worsening.

So the post you are responding to, once you look at the affected generations, doesn't even say what the original poster was claiming.

This makes sense and fits with what I understand to be the general 2/3 owner occupied properties and 1/3 rental properties ratio. I never thought though that this was what was essentially being referred to as the 'homeownership rate'.

It has always bothered me that the naive interpretation (i.e. that it refers to individuals and not properties) is so often used in political discussion (e.g. "2/3 of voters are home owners").

I am really curious what proportion of people actually own a home. Is it even a majority?

Is it because we want to live in nice homes in nice cities? Or is it because literally no matter where you look, it is impossible to buy a home there.

I suspect a lot of column A, a little of column B. You can still get $80k homes in nice little towns in the midwest. But can you work there?

I was really hoping that the pandemic would basically "solve" US housing by normalizing work from home. But no.

WFH has certainly increased.

But it hasn't solved housing because the simple fact is, setting aside cost, most people want to live in big cities. You have more options for everything from food to entertainment.

Then there's the politics...small towns tend to lean right. My brother got a job that lets him WFH, and he thought about moving to some podunk town in Iowa since he saw tons of houses on Zillow for under $75K, then he took a closer look in Google Street View and saw more Confederate flags than he felt comfortable with.

>>[...] then he took a closer look in Google Street View and saw more Confederate flags than he felt comfortable with.

In a way, your brother is probably grateful that the flag bearers flew their colours in the first place, instead of purchasing a house, moving, and then finding out much later.

I’m sure the Iowans are also grateful his brother didn’t move in.

I'm much more left than most people in my wife's very small hometown.

But I'll tell you one thing: Jokes about Tesla's aside, they are welcoming folk and a joy to be around. Big family focus, lots of community, and plenty of time at the lake fishing.

Confederate flags in Iowa?

There are confederate flags in rural areas all over America. Really gives the lie to “heritage not hate”. Especially in WV, which seceded from VA after VA seceded.

People warning of Confederate Flags in Iowa are like people warning of Maga hats in LA.

Something doesn't add up.

As someone else said, go to any rural area in the USA and you'll find Confederate flags. Less common than southern states for sure, but you'll still find them in the eastern half of Oregon, even.

I thought it might have the opposite effect. If you are working from home, you need a work space. Trying to crowd two people around a kitchen table or working at a lounge isn't as nice as a desk in a dedicated space, so I thought there would be some pressure to upsize your living space to accommodate that.

As a programmer? Yes.

As a plumber? Only if competition is low enough.

No question desired locations have more pressure on housing, but all the large cities are having lower inventory.

All of the above. There are tons of houses available all over the country [except within a 2 hour driving commute of the few major financial hub cities] for prices that the median household income would readily qualify.

There's tons of new house construction going on, primarily in areas that are just barely outside of easy affordability (places like all of Texas that isn't Austin, for example).

What there is not is much house construction in the super top most desired cities, in commute-range of the big financial and tech hubs. The combination of high demand and anti-housing policy have made housing in those locations utterly unobtainable.

It's not even really that all the property is going to big investors -- most of the big investors prefer markets like Texas where the ratio of rents to prices is more workable. Much better to pay $500,000 per unit and rent out for $2,400/month than to pay $2,000,000 per unit and rent out for $5,500/month.

"The U.S. now has almost 500 cities where the average cost of a home has hit $1 million, according to Zillow."

Does that sound right? That sounds kind of high to me...

They're counting every city, town, and village in the census data, regardless of how small. For example, the most expensive city in the country has a population of 88:

> Indian Creek, Florida, an exclusive 300-acre island in Biscayne Bay in Miami, is the most expensive city in the country, with a typical home value of around $28.3 million. The city has a total population of 88 residents, including a handful of high-profile celebrity tenants, such as Tom Brady and Enrique Iglesias. [1]

There are over 30,000 places in the dataset, so it's not too surprising that ~500 of them (<2%) are very expensive. Looking at the median city would be much more useful.

[1] https://www.zillow.com/research/million-dollar-cities-2021-3...

Sounds like neighborhoods and gated communities that self incorporated.

"You will own nothing and be happy - or else"

If this https://tab.gladly.io/cats/ can raise 1 million then everything is possible

> Some parts of the U.S. have more homes for middle-income buyers than the national average, according to the National Association of Realtors’ recent analysis.

Color me surprised!

Wouldn't it be interesting if that weren't the case?

I'll be an armchair economist and throw out my ideas for why this is happening:

* Dramatic increase of inequality in the last 40 years means that wealthiest buyers are determining the price of the entire housing inventory. I know too many people with multiple houses. Related to this, the global slosh of foreign capital looking to launder their money, or park their money in tangible assets.

* Perverse incentives in the US tax code. Stepped-up Cost Basis means that aging Baby Boomers are highly incentivized to never sell their homes. After their death, their beneficiaries receive a huge tax benefit.

* Many of the economically productive areas of the country have zoning laws which restrict new housing development, which cause scarcity, which drive up the value of existing houses for the benefit of existing homeowners.

* There has been almost no productivity increase in the construction industry in the last several decades. Due to their inefficiency, the industry is incentivized towards expensive, higher-profit houses, instead of producing higher volume, lower-cost houses.

> Stepped-up Cost Basis means that aging Baby Boomers are highly incentivized to never sell their homes. After their death, their beneficiaries receive a huge tax benefit.

How does that work? If I buy a house for $100K, then sell it 30 years later for $1M, am I really going to get taxed on the $900K gain?

And what tax benefit if it's inherited? Does inheriting reset the cost basis so there will never be taxes due on that $900K gain or something?

> How does that work? If I buy a house for $100K, then sell it 30 years later for $1M, am I really going to get taxed on the $900K gain?

You get taxed on a $400k gain. The first $500k of gain (in your primary residence for 3 years) is ignored. In fact, I know (casually) someone who moved in 2021 just to lock in their appreciation at the 500k level.

> And what tax benefit if it's inherited? Does inheriting reset the cost basis so there will never be taxes due on that $900K gain or something?

Yes. When you inherit property (real estate, stocks, art, etc.) the basis resets to the present fair market value (easy to determine in case of a publicly traded stock, probably requires an appraiser for real estate if you don't sell it quickly.)

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