According to the Census Bureau Homeownership and Vacancy Survey released on Thursday, the vacancy rate for homeowner housing was 1.7 percent remaining virtually unchanged from Q4 2016’s rate of 1.8 percent. Additionally, the home ownersip rate of 63.6 percent was not statistically different from the Q1 2016 rate of 63.5 percent or the Q4 2016 rate of 63.7 percent.
However, despite this unchanged data, Trulia Chief Economist Ralph McLaughlin noted that there is still surprising news out of this quarter’s report, as the number of owner occupied households grew faster than the rate of rental households for the first time in 11 years.
“Strong renter household formation is one of the reasons why the homeownership rate has continued to drop since the onset of the housing crisis, so any sign this trend is reversing is something to take note of” said McLaughlin. “We look forward to future releases of these data to determine whether this is a statistical blip or a trend.”
According to McLaughlin, President Trump’s tax reform, notably the potential for a doubled deduction, may impact the homeownership rate. A higher deduction may pressure some to buy, however, it may also incentivize others to rent. McDonald states that the reason for this is that “raising the deduction will mean that some renters at the margins would not be able to write off enough mortgage interest from a home purchase to itemize their tax return, which lessens the financial benefits of making the transition to homeownership.” McLaughlin believes that despite this possibility, a deduction raise will still increase the homeownership rate in the long run.
Homeownership is part of the American dream to many young homeowners. Young households are mostly renters, and may finally realize the financial benefits of homeownership with the deduction hike. “We anticipate net effect of raising the standard deduction will help increase the homeownership in the long run,” said McLaughlin.
Source: Seth Welbourn