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June 10, 2016 | Home Ownership Rates Vary Wildly: What’s Going On?

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Reader Duncan Burns, a writer for the “Valley Patriot”, a local newspaper in North Andover, Massachusetts pinged me with an interesting chart on the home ownership rate in Massachusetts.

A quick look at the chart led to hours of investigation. There were huge variations in home ownership rates, state by state.

Region in the county was not a factor, nor was the size of the state. Home ownership peaked in 1998 in one state and 1999 in several more.

The Massachusetts home ownership rate did not peak until 2012!

What’s up with that?

Massachusetts Home Ownership

Home Ownership MA

A variation of that chart kicked off numerous questions:

  • What other states peaked late?
  • What states peaked early?
  • What states are most above and most below the US average?
  • Is state population a factor?

In all of the following charts, the data for individual states goes to 2015, while the US average is through first quarter of 2016. The home ownership rate for the entire US is seasonally adjusted, individual states are not.

Home Ownership Rates Five Largest Population States

Home Ownership Highest population

In this group, Illinois is the most above the US average home ownership rate. Illinois is the 5th largest state by population. The US average in 2015 was 64%. Illinois was at 65.4%. Florida, the third largest state by population, is also above the national average. Population alone does not appear to be a major factor in home ownership rates.

Home Ownership Rates of Five Highest States in 2015

Home Ownership Highest

The coal bust state of West Virginia and the rust belt state of Michigan have the highest current home ownership rates at 74.9% and 74.6% respectively. The pattern stops there. Delaware, Vermont, and New Hampshire follow.

Home Ownership Rates of Five Lowest States in 2015

Home Ownership Lowest

Dwarfing all the states, I added D.C. to the list. The current home ownership rate in D.C. is a pathetic-looking 40.4%, in a class by itself. Ignoring D.C., congratulations are due New York and California for having the lowest home ownership rates in the nation. A mere 51.5% of New Yorkers own their own home. California sits at 54.3% with Nevada at 54.8%. Rhode Island and Hawaii round out the list. Massachusetts was next in line, just missing the cut. Region is not a determining factor.

Home Ownership Rates Peaking Earliest

Home Ownership Earliest Peak

Congratulations are due Kentucky for trendsetting. It peaked in 1998, well before US average of 2004. North Carolina, Pennsylvania, and Maine peaked in 1999. New Mexico peaked in 2000. I don’t see much of a reason here, but all of the early peakers are still well above the national average.

Home Ownership Rates Peaking Latest

Home Ownership Latest Peak

Congratulations are certainly due Massachusetts for peaking in 2012, a year later than runner up Vermont. Note that that Massachusetts plunged like a rock following a touch of the national trendline.

Data Sorted Low to High based on 2015 Home Ownership Percentage

STATE2000200520102015PEAKPEAK YEAR
New York53.455.954.551.555.92005 & 2007
California57.159.756.154.360.22006
Nevada6463.459.754.865.72004 & 2006
Rhode Island61.563.162.858.964.92007
Hawaii55.259.856.159.360.62004
Massachusetts59.963.465.360.565.82012
Oregon65.368.266.361.1692004
Arizona6871.166.661.771.62006
North Dakota70.768.567.161.8712001
Texas63.865.965.361.9662006 & 2007
Alaska66.46665.762.3702003
Washington63.667.664.462.667.62005
Georgia69.867.967.162.971.82002
Louisiana68.172.570.463.373.52008
Colorado68.37168.563.671.32003
New Jersey66.270.166.56470.12005
United States67.468.966.964692004
Florida68.472.469.364.872.42005 & 2006
Kansas69.369.567.464.970.42001
North Carolina71.170.969.565.271.71999
Illinois67.970.968.865.472.72004
Montana70.270.468.166.472.42004
Ohio71.373.369.766.473.32005
Connecticut7070.570.866.5732003
New Mexico73.771.468.666.573.72000
Tennessee70.972.47166.572.42005
Wisconsin71.871.17166.673.32004
Arkansas69.969.267.967.171.22001
Maryland69.971.268.967.172.62006
South Carolina76.573.974.867.177.52002
Virginia73.971.268.767.175.12001
Oklahoma72.772.969.267.472.92005
Kentucky73.471.670.367.975.11998
Nebraska70.270.270.468.171.22004
Missouri74.272.371.268.574.82002
Iowa75.273.971.168.876.62001
Indiana74.97571.269.475.82004
Pennsylvania74.773.372.269.675.21999
Maine76.573.973.869.977.41999
Utah72.773.972.569.976.22008
Wyoming7172.873.469.973.82009
Alabama73.276.673.270782004
Idaho70.574.272.47075.52005
Minnesota76.176.572.670.177.32002
South Dakota71.268.470.670.171.52001 & 2002
Mississippi75.278.874.870.778.82005
New Hampshire69.27474.971.6762009
Vermont68.774.273.671.874.62011
Delaware7275.874.773.377.32004
Michigan77.276.474.574.677.42006
West Virginia75.981.37974.981.32005

Property Taxes

Inquiring minds may be wondering how property taxes play into home ownership rates.

Property Taxes

The above table from the CoreLogic article Comparing the Real Cost of Owning Property Across the United States. This gives us yet another metric to use.

Home Ownership Rates of States With Highest Property Taxes

Home Ownership Highest Property Taxes

Of the five highest property tax states, two are above the US average, two are below. New Jersey trended the entire time right near the average, sometimes above and sometimes below, and is now right on the average.

Home Ownership Rates of States With Lowest Property Taxes

Home Ownership Lowest Property Taxes

Of the five lowest property tax states, South Dakota, Alabama, and Wyoming are above the US average. Colorado is right on the average, and Hawaii (with the lowest property taxes) is well below average ownership.

Valuations

CBS News has a list of the 11 Most Expensive U.S. States to Buy a Home as of May, 2015.

  1. District of Columbia
  2. Hawaii
  3. California
  4. New York
  5. Massachusetts
  6. New Jersey
  7. Alaska
  8. Colorado
  9. Washington
  10. Delaware
  11. Utah

Home Ownership Rates of Five Most Expensive Places

Home Ownership Most Expensive Places

There’s D.C. again. It is the number one in the list of most expensive places, and number one in the lowest home ownership rate.

Overall Analysis

  • The number one factor in home ownership rate is affordability.
  • The most expensive places to buy a home are D.C., Hawaii, California, New York, and Massachusetts, in that order. D.C., Hawaii, California, and New York are also in the bottom home ownership list. Massachusetts just missed the cut.
  • D.C. is the most expensive place to buy a home and also dead last in home ownership.
  • Following D.C., New York has the lowest home ownership rate in the nation. New York is the third most expensive place to live. In addition, New York has Rent Control and rent stabilization programs. New York’s current rent control program, which began in 1943, is the longest-running in the United States. New York has the second highest property tax rate after Illinois.
  • California has the third lowest home ownership and is the third most expensive place to live. California also has Proposition 13, hugely impacting tax rates of recent buyers.
  • Nevada has the fourth lowest home ownership rate but has a low tax rate and is not in the list of expensive places to live. It is the odd man out in this analysis.
  • Rhode Island has the fifth lowest home ownership rate. It also has a high property tax rate.
  • Hawaii is the second most expensive place to live but only the 6th lowest in home ownership rate (counting D.C.) As a possible contributing factor, Hawaii has the lowest property taxes.
  • Massachusetts is the fifth most expensive place to live and had the 7th lowest home ownership rate. It is 16th in property taxes.

Mike “Mish” Shedlock

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June 10th, 2016

Posted In: Mish Talk

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