Comparing Presidents, Owner’s Equity as a Percentage of Residential Real Estate Holdings
This post looks at the owner’s equity as a percentage of the value homes– it was suggested by reader Edward Charles Ponzi Jr. as a follow-up to my post on the ownership society, and another reader, M. Jed, was kind enough to point me in the direction of data.
Data for this post comes from the Fed… 4th quarter real estate holdings and owner’s equity.
Here’s what the series looks like since 1945, the first year for which data is available. Notice… at one point, owners’s equity, on average, was equal to about 88% of the value of a home. That figure collapsed to 64% by 1965, at which point it started to rise again, hitting a new (local) peak at 70% in the early 1980s. Its been mostly downhill from there, with a bit of a leveling off in the late 1990s.
Here’s what it looks like with some color coding by President…
The only administrations under whom owner’s equity actually increased as a percentage of are Carter and Nixon/Ford. To some extent, they owe something to JFK/LBJ, as the graph seems to indicate that the upturn began in that administration, and it wasn’t just a one-time blip. Nixon/Ford saw a big drop from 1973 to 1974 – probably related to the big jump in inflation and perhaps the collapse of the Bretton Woods system. Clinton followed, with the smallest drop, then JFK/LBJ, Reagan, Mr. Ownership Society, Ike, and Mr. Ownership Society’s father came in last.
Overall, the conclusion is that on average, while more Americans may “own” their homes as time goes on, the percentage of the home they actually own outright is diminishing. Put another way… as with a lot of things, Americans are borrowing more and more to buy more and more.
Turnkey real estate companies are a way for individual investors to use their money as part of a larger project, pooling it with other investors to create a larger portfolio than could be achieved on their own.
To be consistent with the post on home ownership, I redid the figures looking at Q1 figures rather than Q4 figures… hence, JFK/LBJ runs from Q1 1961, ending in Q1 1969. This changed the order of the Presidents slightly. It made GW look better, lest anyone accuse me of BDS! Note also… data for years before 1951 is for Q4 – Q1 data was not available.
Second update… several readers have pointed out that I should have mentioned inflation. They are correct… it probably did make a difference during the Nixon/Ford and Carter years.
But what caused the uptick in the mid-1960s? Maybe this, before the rampant corruption years set in?