Forget the American Dream. Renting is officially the American Reality.
In June, the U.S. homeownership rate dropped to 64.8%, the lowest it’s been in almost 20 years. Since the housing market peaked at 69.4% in 2004, the rate has steadily declined—and economists predict it could continue to fall, partly due to stagnant wages and banks’ strict lending standards.
An even more alarming stat? The percentage of Millennial homeowners sits at just 36.2%—the lowest rate since the first Housing Vacancy Survey in 1982—likely due to the fact that only a fifth of young people say homeownership is their primary focus, compared to other goals like saving for retirement.
“We are becoming more of a rental society,” said Patrick Newport, an economist at IHS Global Insight in Lexington, Mass. “It’s becoming harder to own a home.”
So just how concerning are these stats for the economy? Well, it depends on who you ask.
According to Jed Kolko, chief economist and vice president for analytics at Trulia, the declining homeownership rate isn’t necessarily a sign of trouble if young people are increasingly renting their own places as opposed to living with their parents. And in fact, the percentage of young adults who head households has actually increased since the end of the Great Recession, which could support that theory.
However, others, like Neil Irwin of The New York Times, feel that we do need to see an uptick in the number of homeowners before the economy can truly pick up steam.
If you think you’re ready to make the move from renting to owning—and give the economy a helping hand while you’re at it—make sure you steer clear of these all-too-common home-buying traps.