The U.S. has long boasted one of the highest rates of homeownership of any country, thanks in no small part to tax breaks for mortgage borrowers. That rate climbed steadily for a decade on the strength of demographic factors and the availability of newfangled mortgage products, peaking at 69% toward the end of 2006. Since then, soaring unemployment and a wave of foreclosures have pulled down the rate by 1.7 percentage points, to its current level of 67.3%, as reported by the U.S. Census Bureau.
Yet according to “The Homeownership Gap,” a paper from the Federal Reserve Bank of New York, official figures are overstated because they do not exclude owners whose homes are worth less than the outstanding balance on their mortgages. Separate out those folks—they are, after all, more like renters than owners—and in some cities, including Detroit, Las Vegas, Phoenix, and San Diego, homeownership rates are 25 to 45 percentage points below the reported figures, say the study’s authors, Andrew Haughwout, Richard Peach, and Joseph Tracy.
