Census: Arizona homeownership rate shrinks to 13-year low

Arizona's homeownership rate dropped to its lowest level in more than a decade, according to newly released census data, even when based on figures that don't factor in the record number of vacant homes in the state.

With the decline in homeownership, more than one-third of all homes in parts of metro Phoenix are rentals.

Results from the 2010 census, which were to be officially released today, show 66 percent of all homes occupied in Arizona are owned by the people living in them, down from previous highs well above 70 percent.

The last time the ownership rate was that low was in 1997.

But the measurement accounts only for occupied homes.

Calculate owner-occupied homes as a portion of all homes - including vacant ones - and the actual homeownership rate would be far lower.

The number of vacant homes in the Valley - those that are not second homes or vacation properties - has climbed by nearly 200,000 since the last census in 2000. Those empty homes aren't included in the usual homeownership rate.

Since the end of 2007, more than 150,000 metro Phoenix homes have been foreclosed on, so the drop in the state's number of homeowners and rise in vacant homes was expected. But the actual shift couldn't be calculated before the census results.

"It's clear now that a 70 percent homeownership rate for Arizona isn't sustainable," said Michael Trailor, director of the Arizona Housing Department. "When the rate was that high, too many homeowners weren't ready or financially equipped to keep their houses."

He said the state's homeownership rate is likely to decline more, and the rental market will continue to grow because many people can't obtain mortgages to buy now or just don't want to own a house because they aren't ready for a long-term commitment.

Renters

Most of the foreclosure homes have been purchased by investors, and many are now rentals.

Many Arizona homeowners who lost houses to foreclosure are now renters. Some moved into rentals in the same neighborhood where they once owned and are now paying half as much a month to live there.

With a 66 percent homeownership rate, the remaining 34 percent of occupied homes are rentals. That rate again doesn't include vacant homes.

Of the state's vacant residences, not including vacation homes, nearly half are categorized as rentals, according to the census.

Some cities, particularly suburbs at the edges of metro Phoenix, have nearly as many rental households as owner-occupied households.

More than half, 51.8 percent, of the homes occupied in Tolleson are rentals. Avondale's rental-housing rate is about 39 percent. Eloy, in Pinal County, also was at 39 percent.

About 42 percent of the lived-in houses in the city of Phoenix are rentals. Chandler's rate is 34 percent.

Tempe actually has the highest rate of rental homes, 55 percent, most likely because of high demand for student rentals around Arizona State University.

In some cities with higher-end homes, rental rates remain lower. In Scottsdale, about 31 percent of the homes occupied are rentals. In Carefree, another city with high-end homes, only 13 percent of the homes with residents are rentals.

Figuring the rate

The census' homeownership rate is used by most federal, state and local government agencies for planning and budgeting.

The homeownership rate has long been calculated by dividing the number of homes lived in by the owner, or owner-occupied, by the total number of occupied houses. Vacant homes are excluded from the total.

Arizona's homeownership rate was 74.7 percent in 2000, according to the last decennial census. The state's rate remained above 70 percent until the housing crash started in 2007. The rate has steadily been falling since then, and the number of vacant homes climbing.

What has remained more steady in the past decade is the number of vacant second and vacation homes.

About 184,000 of Arizona's vacant homes are considered recreational or occasional-use properties, according to the census, compared with 142,000 in 2000.

In 2000, there were about 146,000 vacant homes in Arizona, not including seasonal and vacation properties. The 2010 census tracked just over 279,000 vacant homes, not including second homes.

"It all goes back to population," said Jim Rounds, an economist with Scottsdale-based Elliott D. Pollack & Co. "We haven't seen a noticeable increase in people moving here during the past few years, and we still have a lot of speculative homes built during the boom empty."

by Catherine Reagor, Ronald J. Hansen and Matt Dempsey The Arizona Republic May. 12, 2011 12:00 AM



Census: Arizona homeownership rate shrinks to 13-year low