In the teeter-tottering relationship between rental housing and homeownership, demand for rentals stayed up in the second quarter of 2011 while homeownership remained static, according to residential vacancy and homeownership data released by the U.S. Census Bureau today.
While the national vacancy rate for rental housing dropped to 9.2%—a decrease of 0.5 percentage points compared to the previous quarter and down 1.4 percentage points year over year—the homeowner vacancy rate remained at 2.5%, a mere 0.1 percentage points lower than the previous quarter and unchanged from the year before.
Overall, the homeownership rate dropped to 65.9%, down 1.0 percentage points from the previous year and down 0.5 percentage points from the first quarter. The Midwest bested the rest of the country with a homeownership rate of 70.0%, higher than any other region. The West had the lowest rate of homeownership at 60.3%. Rates in all regions stood lower than they had in the second quarter of 2010.
"A lot of things are reverting to look like the late 1990s," says Mike Montgomery, an economist at IHS Global Insight, pointing to the second quarter of 1998 when the homeownership rate stood at 66.1%. Even in the multifamily sector, while vacancy rates are dropping with increasing speed, the numbers are "not overwhelmingly low," he says. "Between 2001 and 2010, rental had a vacancy rate of close to 10%. But before that, the number was closer to 7.5% to 8%."
Both rentals and homeowner units fared better in suburbs than in cities. Urban vacancy rates among rental units stood at 9.6%, and homeowner units at 2.9%. In the suburbs, rentals registered a vacancy rate of 8.6% while vacancies among homeowner units stood at 2.4%.
By region, the South recorded more standing inventory that any other area of the country both in rental housing (vacancy of 11.4%) and homeowner units (vacancy of 2.7%). Vacancy rates for homeowner units in the Northeast, Midwest, and West were not statistically different, at 2.3%, 2.5%, and 2.5%, respectively. Among rental units, vacancies were second highest in the Midwest (10.3%), followed by the Northeast and West (both at 6.8%).
Among population segments, homeownership was strongest among those 65 years of age or older (80.8%) and weakest among those under age 35 (37.5%). Ownership rates declined on an annual basis for all age groups 64 years of age and younger, while the rate among owners 65 and older had no significant change.
Non-Hispanic white households reported the highest homeownership rate, at 73.7%. All other races combined stood at 56.0%, with black householders reporting a homeownership rate of 44.2%, and Hispanic householders at an ownership rate of 46.6%.
Claire Easley is a senior editor at Builder.
Learn more about markets featured in this article: Greenville, SC.