It is endlessly repeated in political speeches that home ownership is part of the “American Dream,” and so it is for most people — about 64 percent of U.S. households own their own home. It is especially important if you are married, as we will see — which makes intuitive sense.
As part of this “dream,” the U.S. government has for decades created large subsidies and gigantic government-sponsored financial institutions to promote home ownership by promoting mortgage lending. Notable among these institutions are Fannie Mae and Freddie Mac, which notoriously went broke in 2008 while following the government’s instructions, survived with a $189 billion taxpayer bailout, and are still massive operations, with $5 trillion in mortgage risk (yes, that’s “trillion” with a T).
Given these very expensive efforts, how has the American home ownership rate fared? Let us look back to 1982 (which is the first year the Census Bureau has the breakdown of home ownership rates by marital status) and compare it to 2014 (the most recent available data). This allows us to look through the housing bubble and collapse of the 2000s, as well as the savings and loan collapse of the 1980s, and see what has happened net over a generation.
On average for the whole United States, from 1982 to 2014 the home ownership rate fell slightly, despite all the efforts to pump it up, like this:
1982: 64.5 percent
2014: 64.0 percent
However, it turns out that the overall average is composed of two completely different parts. Home ownership may on average be quite a bit more important to you, and more achievable, if you are a married couple than if you are not — at least we can see a huge difference in the observed home ownership rate. It is much higher for married couples — and it has gone up since 1982, while the overall rate was falling. If you are married Americans, you have a very high and improved probability of owning your home. Here are the home ownership numbers for married couples:
1982: 78.5 percent
2014: 80.3 percent
All other households, those that are not married, have a much lower home ownership rate. However this homeownership rate has also gone up since 1982. Here are their numbers:
1982: 44.0 percent
2014: 48.7 percent
Wait a minute! Married household home ownership went up, and not married household home ownership went up. Combined that is all the households there are. But the total home ownership rate went down. Is that possible?
Yes, it is. It is because the mix of households on this measure changed dramatically. Married couples, with their far higher home ownership rate, fell remarkably as a percentage of all households. Not married households, with their lower home ownership rate, rose remarkably as a percentage of households. So although both parts had their home ownership rise, overall it fell. Here is the change in the mix of American households by marital status:
1982: Married households, 59.4 percent; not-married households, 40.6 percent
2014: Married households, 48.4 percent; not-married households, 51.6 percent
In round numbers, married couple households went from about 60 percent to less than half of all households in a generation. This striking change in mix caused the overall American home ownership rate to fall while both components were rising.
There is a mathematical lesson in this. You can’t tell what an average means unless you know how the mix of the population is shifting. And there is a lesson in political economy. Home ownership, the most common modern form of property ownership, is reasonably argued to have important advantages in social stability for a democratic society. Marriage, as is well documented, has substantial economic and social advantages, especially for children. Marriage and the rate of home ownership are linked.
Alex J. Pollock has been a resident fellow at the American Enterprise Institute in Washington since 2004. From 1991 to 2004 he was president and CEO of the Federal Home Loan Bank of Chicago. He wrote this for InsideSources.com.