WASHINGTON–A new analysis has found that while U.S. home values have hit record levels during the past four years, some demographics groups have benefitted more than others, while overall data is being skewed by senior citizens.
The analysis, from the Pew Research Center, found that homeownership rates since the peak in 2004 are down across the board. But while the rate among white households has fallen 5%, it has fallen 16% for African-American households.
The rate among households age 65 and up has fallen just 3%, compared with 18% for those younger than 35, Pew said.
Nationally, Pew noted the homeownership rate hit a more-than 50-year low in July of 2016, and has moved even higher over the past six months, reflecting a growing population of senior citizens who continue to own homes in much greater numbers than their younger counterparts.
“Today’s homeownership rate is being propped up by an aging society,” said Richard Fry, a senior economist at the Pew Research Center.
While home appreciation is a benefit for homeowners, it also lowers affordability for younger buyers. Pew reported it found that as prices rise, homes are slipping further out of reach for younger and minority buyers. Pew found that 72% of renters said they would like to buy in the future, but mortgage applications are down significantly. The falloff has been greatest among African-American and Hispanic borrowers, according to Pew.
Applications for home loans among whites tumbled 45% from 2004 to 2015, but plunged 77% among blacks and 76% for Hispanics, according to Pew. At the same time, the share of loan applications that were approved rose to 71% from 64%, likely reflecting stronger applicant pools, Pew said.
The tightening of credit to reduce default risk has had the unintended consequence of excluding more minorities from homeownership. In 2004, 32% of loans to African-American borrowers were subprime, while in 2015 only 7% of them were, according to Pew.
“That’s not to say that returning to the standards of 2003 [or] 2006 is appropriate,” said Fry in a statement.. “It may be that banks can make successful loans to buyers with less-than-stellar credit histories.”