Owning a home in the United States is becoming less and less common. In fact, it’s hit a 20-yr low at the as of the end of 2014. According to a recent Wall Street Journal article:

“…63.9% of U.S. households owned their homes in the fourth quarter, a level last recorded in the third quarter of 1994. The homeownership rate hasn’t fallen below that level since 1988.”

Of course statistics can be a bit deceiving, and I need to say that the percentage of home-ownership in the US hit a highpoint in 2004 (11 years ago) at 69%. So, it’s not a gigantic drop, but it’s still significant.

This topic makes me think about the big debate over global warming…. Are there truly insidious reasons for the apparent trends in world weather patterns, or are there simply cycles in the weather over time, and we’re entering a new cycle now?

Well, the same kind of question could be asked about home-ownership in the US. Are there social and financial reasons for the drop, which is about 5% measured over the last 11 years, or it is just symptomatic of the inevitable cycles in real estate value and ownership?

I am certainly no expert on either global warming or the home ownership trends in the US, but it doesn’t take an expert to point out one pretty obvious factor that may be affecting home-ownership in the US right now.

That factor is the elephant in the room, and it is called DEBT. Personal debt and national debt. Both of these factors enter in to the picture whenever home-buyers step up and get serious about making an offer on a home. They are most likely going to finance it, so their personal debt load sharply influences the decision of potential lenders.

That’s clear, of course. However, in the background, national debt is influencing interest rates and the ease with which money is flowing in the economy, including mortgage money, whether buyers are considering it or not.

Possibly most relevant in terms of debt is student loans. First-time home-buyers may be strapped with not one but two student loan packages (husband’s and wife’s), totaling close to or more than the value of the home they want to buy. This situation is not uncommon, and it’s unprecedented in US history.

The grandmas and grandpas of most first-time home-buyers probably didn’t have an opportunity to go to college. And their moms and dads may very well have gone to college, but they didn’t come out with the same sky-high debt load. They worked to pay for part of their college tuition, and they borrowed judiciously. The same can be said for many college students today, but the cost of tuition, books and living expenses is MUCH higher now.

Student loan debt and easy-money credit card debt are putting a damper on home-ownership in the US now, in my opinion.

But, whatever the reason, it opens the door for investors to acquire and lease higher-quality homes than ever before. I like that part, for sure.