From the WSJ:
U.S. home values have jumped to records over the past four years, but some demographic groups have participated more in the rally than others.
A study by the Pew Research Center released Thursday 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.
Nationally, the homeownership rate hit a more-than 50-year low in July, although it has since edged higher. That number reflects 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.
Home prices jumped 5.5% in September compared with a year earlier, according to the S&P CoreLogic Case-Shiller U.S. National Home Price Index. That was good news for homeowners, many of whom are nearing retirement age and ready to cash out on the appreciation of the past few years.
But 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.
Deterred by the lack of down-payment money or less-than-pristine credit, it appears many of these households assume they won’t be able to get a loan and don’t bother applying, according to Pew.
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,” Mr. Fry said. “It may be that banks can make successful loans to buyers with less-than-stellar credit histories.”