SOURCE (LINK): The Boston Globe
DATE: January 28, 2016
AUTHOR: Tim Logan
Boston is becoming a home for renters again.
The homeownership rate in Greater Boston plunged last year, according to data released Thursday by the US Census Bureau, dipping below 60 percent for the first time on record.
The decline is in large part attributed to the recent population growth, driven by a wave of young adults moving into apartments around the region. People between the age of 20 and 34 have made up the vast majority of population growth in the core of the region in the last 15 years, said Barry Bluestone, a professor of public policy at Northeastern University.
“It reflects a powerful demographic trend that’s going on here right now,” he said. “Young people are staying in Massachusetts. And most of them are renters rather than homeowners.”
But the figures also reflect the challenges would-be homebuyers of all ages often face in one of the nation’s priciest housing markets.
The median home price in Massachusetts has climbed 4.7 percent in the last 12 months, to $335,000, according to The Warren Group. Housing in many cities and neighborhoods in the urban core now costs more than at the height of last decade’s housing bubble. Yet tighter lending standards and sluggish income growth have made it hard for many would-be buyers to become owners.
All of that has driven the share of the 1.9 million households in Greater Boston who own their homes down to below 60 percent. It was 59.5 percent in the fourth quarter, the Census found, up from 58.7 percent in the third quarter but well below the 63 percent in the same period last year. That’s the lowest rate since the Census started tracking the figure in 2005. And it is well below the 65 percent to 66 percent homeownership rate the region had from 2008 through 2013.
Nationwide, the homeownership rate was 63.7 percent in the fourth quarter. It has been trending down for years, from its bubble-years peak of nearly 70 percent. It is now at the lowest level since the 1980s, as people who lost their homes to foreclosure have struggled to get back into homeownership and a demographic bulge of 20-somethings moves into apartments.
Meanwhile, developers are building for that young renter market, too.
The Census Bureau also reported Thursday that building permits issued in the Boston area hit a 10-year high of 15,248. That’s up 24 percent from the year before and the most since 2005, a sign of surging development in the region.
Yet the makeup of new housing has changed significantly in the last decade.
In 2005, there were almost exactly as many permits issued in Greater Boston for single-family homes as for apartments or condos in multi-family buildings. In 2015, fewer then one-third of permits issued in the area were for single-family homes; nearly two-thirds of those permits were for apartments and condos in buildings of five units or more.