—Even as Millennials continued to delay marriage and family
formation and pursue higher education levels, the Homeownership Progress
Index declined only moderately from 2015 to 2016, says Chief Economist
Mark Fleming—
SANTA ANA, Calif.--(BUSINESS WIRE)--
First
American Financial Corporation (NYSE: FAF), a leading
global provider of title insurance, settlement services and risk
solutions for real estate transactions, today released the third annual First
American Homeownership Progress Index (HPRI), which measures how a
variety of lifestyle, societal and economic factors influence
homeownership rates over time at national, state and market levels. It’s
available as an interactive
tool that can be tailored to showcase how trends in economic
conditions, education, income, marital status, ethnicity, and family
size impact potential homeownership demand over time across the United
States at national, state and metropolitan area levels.
“Changing demographic and economic factors either increase or decrease
someone’s potential to be a homeowner. For example, increasing marital
rates, household size, educational attainment, income, and improving
economic conditions all increase potential demand for homeownership,”
said Mark Fleming, chief economist at First American. “The HPRI measures
the potential for homeownership demand based on these underlying
factors. For example, the potential for, or likelihood of, homeownership
may increase because of rising educational attainment or income growth.”
2016 First American Homeownership Progress Index
“Even as Millennials continued to delay marriage and family formation
and pursue higher education levels, the Homeownership Progress Index
only declined moderately from 2015 to 2016,” said Fleming. “Yet, the
prospect for future homeownership demand looks hopeful, as more
households increase their educational attainment level and thus their
prospect for higher income.”
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Nationally, potential homeownership demand represented by the HPRI
declined 0.4 percent in 2016 compared to 2015 based on changes in the
underlying lifestyle, societal and economic data.
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Factors that increased potential homeownership demand included income
growth (+0.02 percent) and rising educational attainment (+0.06
percent), which reflects the influence of Millennial behavior on
homeownership.
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Declines in the share of married households (-0.07 percent) and the
number of children per household (-0.16) were factors that decreased
potential homeownership demand.
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Homeownership demand increased from 2015 to 2016 in 21 of the 50
metropolitan areas tracked by First American, as demographic and
economic trends in these cities raised the likelihood of homeownership.
Additional Quotes from Chief Economist Mark Fleming
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“Potential homeownership demand has decreased 6 percent from the
pre-recession peak, and is at the same level as it was in 1990, 27
years ago.”
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“The change in economic conditions (+0.17 percent) had the greatest
positive impact on potential homeownership demand from the
pre-recession peak to 2016.”
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“The decline in marital rates (-1.8 percent) had the greatest negative
impact on potential homeownership demand from the pre-recession peak
to 2016.”
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“While the national homeownership rate declined modestly in 2016,
homeownership rates varied significantly at the market level.”
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“The difference between San Jose, Calif., the market with the biggest
gain in potential homeownership demand and Birmingham, Ala., the
market with the biggest decline in potential homeownership demand, was
nine percentage points.”
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“Half of the top 10 markets for year-over-year growth in potential
homeownership demand are in either California or Texas, while eight of
the bottom 10 markets are on the East Coast or in the Midwest.”
Chief Economist Analysis: Homeownership, Like Real Estate, is Local
“Small changes in potential homeownership demand hide the large amount
of variation in markets across the country. The underlying factors that
the Homeownership Progress Index accounts for can vary substantially by
region of the country and market. Regions or markets with stronger local
economies and that can attract increasingly educated Millennial
households will have stronger homeownership demand in the future,” said
Fleming.
2016 Homeownership Progress Index State Highlights
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The five states with the greatest year-over-year increase
in potential homeownership demand are: Nevada (+2.1 percent),
Louisiana (+1.5 percent), Kentucky (+1.4 percent), Idaho (+1.4
percent) and Ohio (+0.8 percent).
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The five states with the greatest year-over-year decrease
in potential homeownership demand are: Delaware (-3.3 percent),
Maryland (-2.3 percent), Oregon (-2.3 percent), Rhode Island (-2.2
percent) and Alabama (-2.2 percent).
2016 Homeownership Progress Index Local Market Highlights
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Among the largest 50 Core Based Statistical Areas (CBSAs), the five
markets with the greatest year-over-year increase
in potential homeownership demand are: San Jose, Calif. (+4.7
percent), Jacksonville, Fla. (+3.6 percent), Memphis, Tenn. (+2.9
percent), Sacramento, Calif. (+2.7 percent), and San Antonio, Texas
(+2.6 percent).
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Among the largest 50 CBSAs, the five markets with the greatest
year-over-year decrease in potential
homeownership demand are: Birmingham, Ala. (-4.2 percent), Richmond,
Va. (-3.3 percent), Cleveland (-3.0 percent), Milwaukee (-3.0
percent), and Buffalo, N.Y. (-2.9 percent).
Next Release
The next release of the First American Homeownership Progress Index will
be posted in April 2018.
Methodology
The methodology statement for the First American Homeownership Progress
Index is available at http://www.firstam.com/economics/homeownership-progress-index.
Disclaimer
Opinions, estimates, forecasts and other views contained in this page
are those of First American’s Chief Economist, do not necessarily
represent the views of First American or its management, should not be
construed as indicating First American’s business prospects or expected
results, and are subject to change without notice. Although the First
American Economics team attempts to provide reliable, useful
information, it does not guarantee that the information is accurate,
current or suitable for any particular purpose. © 2017 by First
American. Information from this page may be used with proper attribution.
About First American
First American Financial Corporation (NYSE: FAF) is a leading
provider of title insurance, settlement services and risk solutions for
real estate transactions that traces its heritage back to 1889. First
American also provides title plant management services; title and other
real property records and images; valuation products and services; home
warranty products; property and casualty insurance; and banking, trust
and investment advisory services. With total revenue of $5.6 billion in
2016, the company offers its products and services directly and through
its agents throughout the United States and abroad. In 2016 and again in
2017, First American was named to the Fortune 100 Best Companies
to Work For® list. More information about the company can be
found at www.firstam.com.
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Source: First American Financial Corporation