U.S. homeownership rates and trends (Q2 2015)

Renter-occupied housing increases

by two million year-over-year Residential vacancies and homeownership Q2 2015

1.

2.

3.

Homeownership declines to 63.4 percent, the lowest rate since 1967

• This figure is 130 bps lower year-on-year; 30 bps lower quarter-on-quarter

• Homeownership rates slide as wage growth lags and tighter standards for

mortgage lending act as substantial barriers to entry

Gen X homeownership plummets to 58.0 percent since Q2 2014

• Gen X homeownership declines 220 bps in the past year, further highlighting

a less-elastic demand profile for rental housing

• In spite of a quarterly uptick of 20 bps, homeownership rate for millennials is

down 110 bps year-over-year

Vacancy rates are at their lowest levels since the 1980s

• The national rental housing vacancy rate was reported at 6.8 percent, 70 basis

points lower than the previous year’s second quarter reading of 7.5 percent

• Rental vacancy rates in the South saw the greatest yearly decline at 120 bps

As the U.S. homeownership rate continues to decline, renter-

occupied units increase 4.9 percent over the past year

Source: JLL Research, U.S. Census Bureau, U.S. Bureau of Labor Statistics

2

Demand for rentals continues to demonstrate outsized growth

3

Renter-occupied units increased by nearly 2.0 million in the last year; an increase of 27.9 percent

since 2000

68,752

74,107 75,951 74,725 74,407

33,522 33,429 35,650

39,310

42,878

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Q2 2000 Q2 2004 Q2 2008 Q2 2012 Q2 2015

Tho

usan

ds

Owner-occupied Renter-occupied

8.2% Owner-occupied

27.9% Renter-occupied

Percent Change,

2000 - 2015

Source: JLL Research, U.S. Census Bureau

Renter-occupied households increased 28.9 percent since 2005

4

This increase parallels the decrease in under-35 homeownership in the same time period


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Ren

ter-

occu

pied

hou

seho

lds

(tho

usan

ds)

Hom

eow

ners

hip

(%)

Renter-occupied households Homeownership Under-35 homeownership

43.3%

(2005 Q1)

34.8%

(2015 Q2)

The homeownership rate was recorded at 63.4 percent in the

second quarter, the lowest reading since 1967

5


63.3% 63.4%

60.0%

61.0%

62.0%

63.0%

64.0%

65.0%

66.0%

67.0%

68.0%

69.0%

70.0%

Hom

eow

ners

hip

(%)

Cities outpacing suburbs in rate of homeownership declines

6

The share of U.S. homebuyers making their first purchase dropped in 2014 to the lowest level in

three decades

Source: JLL Research, U.S. Census Bureau, National Association of Realtors (NAR)

Percent Change,

2005 - 2015

-7.6% U.S.

-10.3% Cities

-6.7% Suburbs

68.6% 66.9%

63.4%

54.3% 52.0%

48.7%

75.8% 74.3% 70.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

U.S. Cities Suburbs

This shift is happening across geographies

7

Homeownership declines in excess of 1.0 percent year-over-year in in all regions


55.0%

60.0%

65.0%

70.0%

75.0%

80.0%

Hom

eow

ners

hip

(%)

U.S. Northeast Midwest South West

Homeownership continues to lag employment growth

8

Steady homeownership rate declines since peaking at 69.0 percent in 2004 persist despite continued

employment gains in current cycle

Source: JLL Research, U.S. Census Bureau, U.S. Bureau of Labor Statistics

132,000

134,000

136,000

138,000

140,000

142,000

144,000

146,000

148,000

150,000

60.0%

61.0%

62.0%

63.0%

64.0%

65.0%

66.0%

67.0%

68.0%

69.0%

70.0%

Em

ploy

ed,

16 y

ears

and

ove

r (s

easo

nally

adj

uste

d, th

ousa

nds)

Hom

eow

ners

hip

(%)

U.S. Employed, 16 years and over - SA

However, despite employment growth, wage growth lags

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

Jan-

06

Apr

-06

Jul-0

6

Oct

-06

Jan-

07

Apr

-07

Jul-0

7

Oct

-07

Jan-

08

Apr

-08

Jul-0

8

Oct

-08

Jan-

09

Apr

-09

Jul-0

9

Oct

-09

Jan-

10

Apr

-10

Jul-1

0

Oct

-10

Jan-

11

Apr

-11

Jul-1

1

Oct

-11

Jan-

12

Apr

-12

Jul-1

2

Oct

-12

Jan-

13

Apr

-13

Jul-1

3

Oct

-13

Jan-

14

Apr

-14

Jul-1

4

Oct

-14

Jan-

15

Apr

-15

Jul-1

5

Yea

rly p

erce

nt c

hang

e

Ave

rage

hou

rly e

arni

ngs,

tota

l priv

ate

Average Hourly Earnings Yearly Percent Change

9

As average hourly earnings struggle to maintain 2.0 percent yearly growth, homeownership lags

Source: JLL Research, Bureau of Labor Statistics

This is also hindered by rigid mortgage standards

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

62.0%

63.0%

64.0%

65.0%

66.0%

67.0%

68.0%

69.0%

70.0%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Tot

al m

ortg

age-

rela

ted

issu

ance

(in

bill

ions

of $

US

)

Hom

eow

ners

hip

(%)

Total mortgage-related issuance Homeownership

10

The U.S. mortgage industry has originated 48.1 percent less than 2006 levels

Source: JLL Research, U.S. Census Bureau, Sifma

Home price gains exhibiting strong, consistent momentum

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015

Yea

rly p

erce

nt c

hang

e

Homeownership House Price Index

11

Consistent homeownership decline has paralleled appreciation of home prices, up in excess of 5.0

percent for five consecutive quarters

Source: JLL Research, U.S. Census Bureau, Federal Housing Finance Agency

Robust pricing growth concentrated in West Coast, Sunbelt

12

Denver, San Francisco, Dallas and Miami leading housing price growth

10.0% 9.7%

8.4% 8.0%

7.4% 7.4%

6.6% 6.3% 6.1%

5.1% 4.9% 4.8%

2.9%

2.2% 2.1%

1.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Ave

rage

ann

ual h

ousi

ng p

rice

inde

x gr

owth

, la

st 1

2 m

onth

s

Source: JLL Research, McGraw Hill Financial

Millennials see small bump, gen x continues stark decline in Q2

13

Millennial homeownership saw a 20-basis-point bump in the most recent quarter, while gen x slides

another 40 bps

Source: JLL Research, U.S. Census Bureau, Urban Land Institute

-0.5

0.6

-0.7

-0.3

-0.5

-0.6

-0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

U.S. Under 35 years 35 to 44 years 45 to 54 years 55 to 64 years 65 years and over

Dec

line

in h

omeo

wne

rshi

p, Q

-o-Q

(%

)

Homeownership continues long-term decline across age cohorts

14

Pronounced declines of over 8.0 percent nationally over a decade, as well as throughout age

cohorts—notably from the millennial and gen x segment


-8.1

-19.1

-15.7

-8.5

-6.6

-3.7

-25.0

-20.0

-15.0

-10.0

-5.0

0.0

U.S. Under 35 years 35 to 44 years 45 to 54 years 55 to 64 years 65 years and over

Dec

line

in h

omeo

wne

rshi

p 20

06 -

201

5 (%

)

With gen X seeing eight straight quarters of declines, down 220

bps from Q2 2014

15

-350

-300

-250

-200

-150

-100

-50

0

50

100

150

200

Q1 2005 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015

Hom

eow

ners

hip

rate

ann

ual c

hang

e (b

ps)

U.S. Under 35 years 35 to 44 years 45 to 54 years

70.1%

(2005 Q1)

58.0%

(2015 Q2)


Only 69.9 percent of those aged 45 to 54 currently own a home

16

This figure has declined from a high of 77.4 percent in the second half of 2004; those aged 55 to 64

have experienced similar declines over the same time frame

Source: JLL Research, U.S. Census Bureau,

-7.3% 55 to 64 years

-8.4% 45 to 54 years

Percent Change,

2005 - 2015

76.3%

73.6%

69.9%

81.3%

78.7%

75.4%

64.0%

66.0%

68.0%

70.0%

72.0%

74.0%

76.0%

78.0%

80.0%

82.0%

84.0%

Q2 2005 Q2 2010 Q2 2015

Hom

eow

ners

hip

(%)

45 to 54 years 55 to 64 years

…while millennials maintain a lagging rate of 34.8 percent

17

Endemic debt and lagging wages are two reasons keeping millennials out of homeownership, driving

a 18.7 percent decline over the past ten years


-7.6% U.S.

-18.7% Under-35 years

Percent Change,

2005 - 2015 64.7% 67.2%

68.6% 66.9%

63.4%

38.7% 40.2%

42.8%

39.0%

34.8%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

Q2 1995 Q2 2000 Q2 2005 Q2 2010 Q2 2015

Hom

eow

ners

hip

(%)

U.S. Millennial

Shifts drive vacancy decline to 6.8 percent in the second quarter

6.2% 6.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Ren

tal v

acan

cy (

%)

18

Falling 70 bps in the last year; the rental vacancy rate is at its lowest since the 1980s


U.S. vacancy rates reported at 6.8 percent for rental housing

19

Year-on-year vacancies in metros are declining at the fastest rate – 8.2 percent


0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Q2 2005 Q2 2006 Q2 2007 Q2 2008 Q2 2009 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 Q2 2015

Ren

tal v

acan

cy (

%)

U.S. Metros Cities

Tightening vacancies across regions led by Northeast, West

20

Rental vacancies have declined in these regions by at least 40 bps compared to rates from Q2 2014


0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Ren

tal v

acan

cy (

%)

U.S. Northeast Midwest South West

COPYRIGHT © JONES LANG LASALLE IP, INC. 2015

For more information, please contact:

Sean Coghlan

Director

Investor Research

+1 215 988 5556

[email protected]

Michael Morrone

Research Analyst, Multifamily

Investor Research

+1 312 228 2304

[email protected]

Or, find more multifamily real estate research at jll.com.

>>> Click here to check it out.

http://www.us.jll.com/united-states/en-us/research/multifamily?utm_source=slideshare&utm_medium=social&utm_campaign=homeownership

Real Estate

U.S. homeownership rates and trends (Q2 2015)