SHOULD THE STAGNANT HOMEOWNERSHIP RATE BE A SOURCE OF CONCERN

The homeownership rate in the United States was essentially stagnant d uring the 1980s. This stagnation should be a source of concern if the rate reflects stagnant economic conditions and ownership opportunities ; not if it simply reflects changing demographic conditions or prefere nces. Using a series of affordability measures, we find that homeowner ship opportunities improved almost everywhere during the 1980s, sugges ting that the cause of the stagnant rate was something other than econ omic conditions. In fact, we found that both demographics and changes in preferences led to an increase in the proportion of households head ed by single people; all else being equal, this would tend to push the owner-occupancy rate downward. We also found that, while homeownershi p opportunities improved during the 1980s, the ex ante user cost of ow ning a home increased almost everywhere, reducing the financial attrac tiveness of owning a home. The combination of improving affordability conditions and worsening financial appeal had an overall neutral effec t on the aggregate ownership rate.