Tuesday, May 7, 2013

Homeownership rates in Colorado decline in 2012, early 2013

New data released late last month:

The homeownership rate declined during 2012 to a 14-year low, dropping to 65.3 percent. In 2011, the homeownership rate in Colorado was 65.9 percent. The last time it was lower than 2012's rate was during 1998 when the homeownership rate was 65.2 percent.  For the second year in a row, the Colorado homeownership rate fell below the national homeownership rate. The national homeownership rate was 65.4 percent during 2012 and 66.1 percent during 2011. The first graph shows national and Colorado homeownership rates since 1984:

Quarterly rates have been published since 2005. As of the first quarter of 2013, the homeownership rate in Colorado and in metro Denver fell on a quarterly basis to 63.7 percent in Colorado and 61.0 percent to metro Denver. During the first quarter of 2012, the Colorado rate was 64.5 percent and the metro Denver rate was 61.9 percent. The homeownership rates were also down when compared to the fourth quarter of 2012, with Colorado down from the fourth-quarter 2012 rate of 64.9 percent, and metro Denver down from the fourth-quarter 2012 rate of 61.7 percent. Both Colorado and metro Denver homeownership rates were below the national rate of 65 percent during the first quarter of 2013. The second graph shows the homeownership rate for each quarter since 2005. 

Clearly, the homeownership rate has been decreasing an all areas shown since at least 2005. The annual data suggests that the homeownership rate in Colorado peaked some time during 2003 and has been declining since.

Homeownership has declined partly due to foreclosures.  From 2007, through 2012, there were more than 125,000 completed foreclosures. Out of approximately 1.2 million owner households, that's a substantial number. On the other hand, we've seen the homeownership continue to decline even as foreclosures taper off. This is due to the fact that Colorado continues to see pretty sizable numbers in household formation (more than 20,000 households per year). A lot of those new households are renter households since, even in the low-mortgage-rate environment we're in right now, it can still be a challenge to afford a home and get a mortgage.

Consequently, Colorado and metro Denver show lower homeownership rates than the nation precisely because we continue to see in-migration and steady population growth while much of the nation is seeing less growth right now. Those areas with less growth may show a higher homeownership rate because they're attracting fewer young new residents who are not homeowners.