Ownership Eluding Boomers, But Older Americans Are Buying More

WASHINGTON — President Clinton and his fellow baby boomers may be taking control of the country, but new research suggests they’ve been net losers in a key economic pursuit as adults: home ownership.

Early analyses of data now becoming available from the 1990 national census reveal a large--and widening--gap between home ownership attainment by Americans in the 25- to 44-year-old group and the generations immediately preceding them.

The gap is particularly severe for the youngest boomers--the 25- to 34-year-olds--whose home ownership rate fell dramatically during the very age bracket that earlier generations managed to buy their first houses.

Widening the generational division even further, according to researchers, is another trend: Americans in the current 65-year-and-older age group are increasing their rate of home ownership in comparison to earlier generations when they were at the same age. As a result, older Americans today are more likely to own their homes than any generation in history.

“The gap is very troubling,” said Dowell Myers, associate professor at USC’s Urban and Regional Planning School. “The American dream is that you grow up, you work hard, and you buy a home. But that hasn’t been true (for the baby boomers born in the late 1950s and early 1960s).”

Compared to the current generation of seniors, who began buying their first houses in the 1950s and have now built substantial real estate equities, Myers said, the young boomers “have a very real concern as they look ahead.” They question how they will accumulate equity or capital by the time they become seniors, and they’re forced to conclude it won’t be through home equity like many of today’s elderly.

Using state-by-state housing data from the census, Myers and three colleagues found that the gap between the rates of home ownership by seniors (65 years and older) and young households (25-34 years of age) grew sharply across the country from 1980 to 1990--even doubling in some states.

Their conclusions were published in Fannie Mae’s scholarly quarterly, Housing Policy Debate. Whereas the home ownership rate overall in the United States remained essentially flat during the decade, the researchers found that young boomers (25-34) experienced a 6.3% drop in the rate of home ownership, and older boomers (35-44) saw a 5% decline.

In 1980, nearly 52% of all 25- to 34-year-olds already owned a home, whereas by 1990, only 45.3% of 25- to 34-year-olds were homeowners. The pattern was similar for older boomers (35-44): In 1980, 71.2% of that age group owned a home. By 1990 the proportion had dropped to 66.2%.

Pre-boomers (45-64 years old) remained stable in their home ownership rate from 1980 to 1990--77.3% of all households owned a home. But senior Americans (65 years-and-older) did something during the past decade that demographers had never seen before: They actually expanded their rate of home ownership by 5% points, reversing a long tradition of disposing of homes once they hit their late 60s and early 70s. By 1990, over 75% of all senior households owned their home, up from 70% in 1980.

In national terms, by Myers’ calculations, the generation gap in home ownership rates between young households and elderly grew from 18.5 percentage points in 1980 to nearly 30 points in 1990. In a handful of states, the gap in 1990 was much wider. In Hawaii, for instance, there is a 44 percentage point difference between the rate of home ownership among seniors and young boomers. In Texas, the gap is nearly 40%, Oregon, 38.4%, California, 38.2%, Florida, 36.9% and Arizona, 36.5%. All these states experienced major inflows of relatively affluent retirees during the past decade, accentuating the national trend under way.

In an interview, Myers noted that a combination of factors--employment, housing prices and mortgage rates--all contributed to the drop in home ownership rates among baby boomers during the last 10 years. Whatever the specific causes, though, Myers added, the data have national public policy significance as the country struggles with a huge budget deficit and vast new expenditures on the horizon for health care.

Specifically, Myers said, “we have to recognize that our old perceptions and attitudes about the elderly may be out of date.” Rather than the economically strapped, physically frail elderly of prior generations who needed help from the young, we now have a relatively affluent generation of seniors who are still expanding their housing consumption, not contracting.

“It’s a new world,” Myers said. “The highest percentage of home ownership in Los Angeles is among (seniors 65-years and up).” Younger baby boomers, by contrast, are renting--not buying--real estate.

But a potential bright side to the generational housing gap may be just over the horizon. Demographics expert Cheryl Russell, executive editor of the “Boomer Report,” a New York-based newsletter, predicts the home ownership-hungry younger boomers will be the most important players in American housing this decade.

As long as mortgage rates remain low and home prices stable, according to Russell, “the boomers are going to close that gap. There is an explosion of first-time home buying about to hit the market.”