One of my six favorite untruths that the media told about the economy under Biden administration was that young people were giving up on ever being able to own a home. To be clear, I have always had a mixed view of homeownership. In a country where most renters have few rights, meaning they can be subject to eviction or exorbitant rent increases at any time, owning a home can be an important source of security.

However, homeownership is not always the path to accumulating wealth that many claim. Home prices move in both directions, as many new home buyers painfully discovered when the housing bubble burst in 2007-09. But even without a bubble home prices can head downward.

Many people who bought homes in Detroit in the 1970s saw the value of their home plummet as the auto industry began a long decline. In this case, owning a home would have been an especially bad investment choice since house prices were likely to go the same way as job opportunities. Undoubtedly, many people who lost their jobs in the auto industry also were looking at large losses on their houses if they wanted to pick up stakes and look for work in another part of the country.

Also, as a general rule it is not a good idea for someone to own a home who is not in a stable family or employment situation. The round-trip costs of buying and selling a home are around 10 percent of the house price. If someone buys a house, and then for family or employment reasons has to sell it a year or two later, this would mean $30,000 in transactions costs on a $300,000 house. That is a lot of money to throw in the toilet.

For these reasons, I am not one of those who think of homeownership as being an essential part of life, but nonetheless, most people would like to be homeowners. So, when there is a significant decline in homeownership rates, ether in aggregate or for specific groups, that is worth noting.

My complaint about the media’s coverage of homeownership rates under Biden, is that they were touting the bad story, even when there wasn’t one. The graph below shows the homeownership rate for households headed by someone under age 35 for the last two decades.

As can be seen, after rising in the housing bubble years, the homeownership rate for young people fell sharply in the next decade. It dropped from a peak of 43.2 percent in the first quarter of 2005 to a low of 34.1 percent in the second quarter of 2016. It then began to inch upward, hitting a pre-pandemic peak of 36.6 percent in the fourth quarter of 2019. (Sorry about the labeling, I’m still learning Datawrapper.)

The numbers for pandemic shutdown period, the 2nd and 3rd quarters of 2020, are somewhat skewed, since many young people who were not homeowners moved back in with parents. This raised the rate of homeownership among young households, since many of the non-homeowners were not in the sample.

By the first quarter of 2021, this situation had largely normalized and 38.1 percent of young households reported being homeowners. This is likely a story where many young people were able to take advantage of the extraordinarily low mortgage rates at the time, and also the pandemic checks that had been sent out to sustain people’s income and support the economy through the shutdown period.

The homeownership rate continued to rise through 2021 and 2022, peaking at 39.3 percent, a rate hit both in the third quarter of 2022 and the first quarter of 2023. At this point, the Fed’s tightening had led to a big jump in mortgage rates, which together with the large pandemic jump in house prices, was making it difficult for young people to buy homes, and ownership rates were edging downward.

However, even as homeownership rates for young people edged downward, they were still above the pre-pandemic peak. The rate for the 4th quarter of 2023 was 38.1 percent. At this point, we were already seeing news stories posing the question of whether young people would ever be able to own a home. This was at a time when the ownership rate was still 1.5 percentage points above the pre-pandemic peak.

The homeownership rate didn’t fall below the pre-pandemic peak until the 2nd quarter of 2024. Even in the 3rd quarter of last year, the homeownership rate for young people was still above the year-round average for 2019. It first fell below the 2019 average last quarter when it hit 36.3 percent.

Anyhow, under Biden, the major media outlets felt it was important to tell us how difficult it was for young people to buy a home even when their homeownership rates were still above their pre-pandemic peaks (here, here, here, here, and here). Now that their homeownership rates are below the pre-pandemic peak, it seems like it might be a good time for another story.