A better measure of homeownership · ↗ www.missingmiddleinitiative.ca

One of my early posts on this blog was about how the standard homeownership rate does not mean what you think it means. In short, it measures the proportion of households living in owner-occupied housing, not the proportion of people who own a home. This creates a perverse effect when more young people are forced to move back in with their parents (or never leave in the first place), as is increasingly the case in Canada. A young renter moving into his parents’ basement eliminates one non-owner household from the denominator. The owner-occupied household remains. The measured homeownership rate therefore rises, even though nobody has become a homeowner.

Mike Moffatt of the Missing Middle Initiative has a great post on a new homeownership metric developed by the Minneapolis Fed. It is both more useful and closer to what most people intuitively understand “homeownership” to mean. Whereas the standard definition puts households first, this new measure puts people first. The homeowners-to-population ratio is the proportion of adults who own their home, either individually or with a partner. Adult children living with their parents and renters living with a homeowner are therefore no longer counted as homeowners themselves.

Compared with the standard owner-occupied housing measure, homeownership falls dramatically among Canadians under 40 and over 85—though Canadians over 85 are still more likely to own their homes than those aged 30 to 34.