Trigaux: The decline in homeownership in the Tampa Bay area needs to end quickly

Published August 19 2016
Updated August 19 2016

The rate of homeownership — that cornerstone of middle class status and community stability — is hitting 50-year lows nationwide and continuing to fall in the Tampa Bay market years after the end of the last recession.

Panic time? No, but this is a trend that needs to end, pronto. Owning your home is a dwindling dream for too many Americans. That's especially true for many who live and rent in increasing numbers in this metro area.

The share of Americans who own their homes was 62.9 percent in the second quarter. That's the lowest since 1965, according to a recent Census Bureau report. That number's really lower since we do not count all those young adults still living with their parents as renters.

Tampa Bay's homeownership rate halfway through 2016 was 64.3 percent. That's better than the national average. But it's much lower than the 72.9 percent rate of ownership enjoyed by Tampa Bay residents in 2007, at the start of the recession and the severe housing crisis.

A homeownership drop of 8.6 percentage points in just nine years? Hardly a sign of regional economic prosperity, folks.

As we've heard time and again, home­ownership is supposed to encourage stronger communities and greater personal savings by building up housing equity. Millennials stunned by lousy job opportunities and student debt during the economic downturn are slowly emerging from their parent's spare rooms, forming long-delayed households of their own in rental apartments and at least contemplating the financial steps they might take to be able to buy a home.

That's good news but it's a tough path. Since 2007, rents nationwide have increased by 3.7 percent, making it harder to save for a down payment. Over the same period, the costs of owning a home — including a mortgage and maintenance — fell by 13 percent. So says an analysis this month by Apartment List, a San Francisco housing research firm that reviewed Census Bureau data.

In Tampa Bay, the widening cost difference between renting and owning a home is more dramatic. Renter costs in this market have actually declined 2.4 percent between 2007 and 2014. But homeowner costs have dropped 24.4 percent in the same period, courtesy of a dramatic decline in home prices and extremely low mortgage rates.

Critics blame an artificial run-up in homeownership during the presidential years of Bill Clinton and George W. Bush on misguided government policies to expand the American Dream. More people in iffy economic condition bought homes during the sharp rise in appreciation, thanks to aggressive federal subsidies and banks too eager to lower their mortgage lending standards.

"The Bush administration took a lot of pride that homeownership had reached historic highs," John Snow, Treasury secretary from 2003 to 2006, said in a 2008 interview with the New York Times. "But what we forgot in the process was that it has to be done in the context of people being able to afford their house. We now realize there was a high cost."

No question, personal greed also played a huge role. Home buyers often purchased residences beyond their means, assuming the surging real estate market would let them refinance before higher rates on adjustable-rate mortgages kicked in.

When the recession struck and home prices faltered, the weaker and less lucky borrowers became victims of mass foreclosures and job losses. Florida and the Tampa Bay area suffered more than most markets.

That financial damage still hampers the economy and hurts people's ability to get credit. The burst housing bubble also has made an entire generation of young adults — eyewitnesses to the worst recession since the 1920s — more wary of the potential traps, rather than the satisfaction, of owning a home.

The share of first-time home purchases remains stuck near three-decade lows. Home prices are rising much faster than incomes, making it hard for buyers to save for a down payment.

All of that comes at a cost.

"Our research indicates that not owning a home has a sizable financial cost, as renters miss out on low mortgage rates and are hit by higher rents," states the August analysis by Apartment List. "This phenomenon may exacerbate inequality in our society, as those wealthy enough to invest in real estate benefit from lower interest rates, whereas minorities and younger Americans, hit by rising rents and student debt, risk being locked out of homeownership."

Low-paying jobs. Rising home prices. Higher standards to qualify for a mortgage. What happens when too many millennials are unable (or simply unwilling) to buy a home?

Renting is no picnic, either. Nearly 58 percent of Florida renters in 2014 spent at least 30 percent of their income on rent. No state — yes, that includes pricey states like California, Hawaii and Connecticut — had a higher percentage of renters spending so much. Nearly a third of renters in such states spend more than half their income on rent.

Florida's notorious No. 1 ranking among high rent-to-income states says as much about poor wages here as it does about high rents. But it should stand out as a warning sign that the Sunshine State may face an especially difficult time selling increasingly pricey homes to a growing population of renters so financially pressured by monthly living expenses.

Contact Robert Trigaux at Follow @venturetampabay.