Urban Institute: Rental surge to drop homeownership rate to 61.3% by 2030

The Urban Institute’s Housing Finance Policy Center just released a major new longitudinal study of expected household formation and homeownership rates from 2010 to 2030.The paper predicts that the homeownership rate will continue to decline through 2030 and that a major rental surge is upon us, a surge the United States is not truly prepared to meet.Most concerning, they forecast the homeownership rate to drop to 61.3% by 2030.For context, the homeownership rate in the first quarter of this year fell to 63.7%, the lowest since 1990, according to the U.S. Census.The homeownership rate is the ratio of households that own to overall households — the remaining being rental households.A blog written by the study authors highlights five key take-aways:

1. A rental surge is coming. 13 million of the 22 million new households that will form between 2010 and 2030 will seek to rent, rather than buy, their homes.
2. Most of the new households that will form between 2010 and 2030 will be non-white.
3. The homeownership rate will decrease for all age groups, except those over 75. The authors predict that the overall homeownership rate will be 61.3% by 2030: 70% for whites, 40% for African Americans, and 48% for Hispanics.
4. African Americans will fall further behind all racial groups in homeownership. By 2030, the homeownership rate for African Americans will be 40%, a large drop from 46% in 2000. The rate for Hispanics will move in the opposite direction, increasing from 46% in 2000 to 48% in 2030.
5. The number of senior-headed households will increase dramatically. The number of households over age 65 will increase from 25.8 million in 2010 to 35.4 million in 2020 and to 45.7 million in 2030.