During the housing boom, there was a shift from unencumbered to mortgaged ownership. There was about a 4% decline in unencumbered ownership and about an 8% increase in mortgaged ownership, for a net gain of about 4-5% ownership between 1995-2004. Then, the trend reversed. (In the graphs here, the two graphs would add up to total ownership for each group.) Mortgaged ownership grew the most in the 40-90% income range, but this basic pattern was fairly similar across incomes. That is because income isn't (wasn't) a very useful way to disaggregate homeownership. Ownership is mostly a lifecycle issue. Most of the ownership in the lower income quintiles is unencumbered ownership - probably mostly retired or semi-retired households who bought and paid for their homes when they were younger and had higher incomes. Even most of the low income owners with mortgages are likely older owners with very high equity levels. That is why the recent drop in ownership is focused strongly on the median income quintile. I will be interested to see how far that has fallen when the 2016 SCF data is published.
One theme I am building in the book is that the "subprime bubble" was not associated with housing expansion. Ownership peaked in early 2004, which is when private securitizations were just beginning to rise. The SCF data is noisy, but it does confirm this point. Notice that the middle and lower quintile mortgaged ownership levels peaked in 2004. All of the rise in mortgaged homeownership from 2004 to 2007 was among the top 40% of incomes. That period basically encompasses the full period of the private securitization boom.
Looking at the age groups, we see two distinct groups. Below age 55 there isn't much unencumbered ownership, so what we mostly see is just a rise in mortgaged ownership reflecting the rise in homeownership. Among the older age groups, home ownership rose slightly, but there was a much larger shift into retaining mortgages within the existing pool of owners. The over-65 groups are the only groups that have higher mortgaged ownership rates than they did in 2004.
Putting all of this together, tracking shifts in homeownership, we need to focus on specific groups at the margin. There are many older households of all income levels whose ownership is relatively unaffected by housing and mortgage market changes. And there are some high income younger households whose ownership is relatively unaffected by housing and mortgage market changes.
The errant post-boom crackdown on mortgage lending is specifically targeted at the marginal market of middle class, middle aged and younger households who would be taking their first step into ownership, usually with significant leverage. Where this will show up is mostly in the mortgaged owners in the median income quintile, and a little bit in the 20-40% income quintile. And in the 44 and under categories. I suspect that these categories will continue to collapse. These charts end in 2013, and ownership has dropped considerably since then.
And, now, because the authorities have decided it should, homeownership does track more with incomes. Mortgaged ownership by income is bifurcating between the top 40% and the bottom 60%. Around 65%-70% of households in the top 40% of incomes have a mortgage. For the median quintile, that is surely now well down into the 30s%. This is generally back to the levels of 1995. But, the ownership within that group would be skewed now to higher ages. Since 1995, homeownership should have risen by about 3% simply due to aging baby boomers hitting the age where 80% of households tend to be owners.