The Great Recession’s Impact on Homeownership

The severity of the Great Recession (2007-09) forced many people into foreclosure and prevented others from buying homes because of tightened lending standards or reduced income. Did the recession affect homeownership in later years?

During a Dialogue with the Fed event in September 2020, Assistant Vice President and Lead Economist in Supervision William R. Emmons looked at homeownership rates among different age groups to glean any differences.

Rather than examine the overall ownership rate, Emmons examined rates among different age groups and compared their homeownership rates at comparable ages. For example, the homeownership rate among older members of Gen X (those born between 1965 and 1972) in 2019, when their approximate average age was 50, was compared with the average rate among young baby boomers (those born from 1956 to 1964) in 2009, when their average age was about 50, according to a displayed figure.

The economist first looked at the ownership rate among older baby boomers (those born between 1946 and 1955): Their rate reached about 80% as these families got into their 50s, but this dipped a little in 2009 and 2014.

“I would interpret that as showing some of the effects of the Great Recession and housing problems,” Emmons said.

Next, he looked at younger baby boomers and found that their ownership rate in 2019 was about 5 percentage points lower than the rate among older boomers in 2009, the year in which they were at a similar age with the younger boomers.

“Unless we know for any other reason why those might be different, we can use that as a first approximation for how much the effect of housing conditions affected the younger boomers more than the older boomers,” he said.

As he examined other age groups, Emmons showed that each younger generation had a progressively lower ownership rate than the preceding generation at a similar age.

The falling rate of homeownership was the most severe for the youngest generation. He found that the ownership rate among younger millennials (those born from 1989 to 1996) in 2019 was 21 percentage points lower than rate among younger Gen Xers (those born between 1973 to 1980) in 2004, according to a displayed figure.

“This is some evidence that the impacts of the housing crisis affected younger families—millennials—probably much more than, say, the boomers, as reflected in much lower homeownership rates,” he said.

Additional Resources

• On the Economy: Mortgage Distress during the Great Recession
• On the Economy: How Many People Doubled Up after Losing Housing in Aftermath of Past Recessions?
• On the Economy: House Prices Surpass Housing-Bubble Peak on One Key Measure of Value