MINNEAPOLIS — After years of Americans insisting they cannot afford homes while the official homeownership rate stubbornly remained around 65%, economists at the Federal Reserve Bank of Minneapolis have developed an important new statistical breakthrough: counting the people who don’t own homes.
The traditional “homeownership rate,” it turns out, is really an owner-occupancy rate measuring homes rather than humans. This produces surprisingly encouraging results when several humans who cannot afford homes are living inside one owned by somebody else.
The Minneapolis Fed’s new Homeowners-to-Population Ratio, or HPOP, instead asks the dangerously straightforward question: What percentage of adults actually own their home?
The answer is about 53%.
For adults under 35, the statistical renovation is even more exciting. The traditional method reports a 37% homeownership rate. HPOP finds only 22% actually own one.
Researchers discovered the discrepancy after noticing that an adult living with his parents at age 31 does not become a homeowner merely because the refrigerator is located inside a house.
Roughly 13.9% of American adults live in owner-occupied homes without actually owning them—a category encompassing adult children, relatives, roommates and other people previously enjoying homeownership through geographical proximity.
Economists praised HPOP for finally reconciling government housing statistics with the increasingly popular consumer research technique known as looking around.
Housing policymakers welcomed the improved data, which will allow them to identify exactly who cannot afford a home before designing another program that gives those people more money to bid against each other for the exact same number of homes.
The good news is America’s housing crisis is now considerably easier to measure.
Unfortunately, that appears to be the only part we fixed.
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