The housing bust turned a lot of homeowners into renters. Families who lost their homes to foreclosure went back to renting, and they'll probably stay renters (if not for good) for as long as it takes their credit — and their confidence — to recover. Other people who might have become homeowners have no doubt been spooked by the bust into renting a little while longer.
As a result, the national homeownership rate has dropped since the peak of the bubble in 2005, by about five percentage points. That decline, though, has been notably concentrated among certain groups: Hispanics, men, older millennials, and people living in certain unlucky corners of the country.
These demographics are the most likely to have "lost the American dream," as an analysis by housing website Trulia puts it. The renter rate is up in every large metropolitan area in the country since 2006, according to American Community Survey data (the study looked at the 50 largest metros, minus a handful with insufficient data). Within those metros, it's risen the most for these groups. The Hispanic renter rate rose by 8.7 percentage points:
For 26-to-34 year-olds, it rose by nearly 11 percentage points:
The metro areas with the biggest renter gains were, not surprisingly, those that were also hit hardest by the housing bust. The biggest jumps occurred in Las Vegas, Phoenix and big Florida metros like Miami and Fort Lauderdale. In Las Vegas, the share of households renting rose by nearly 10 percentage points.
Here, we've charted a cross-section of metros from across the country, from Boston, which suffered little from the housing bust, to Vegas at its epicenter:
It's unlikely that all of these groups will return to their 2006 homeownership rates, because homeownership has been trending down for long-term demographic reasons that predate the bubble (young Americans, for instance, are marrying and having kids later). And we probably don't want to think of the homeownership rate at the height of the bubble as some kind of "natural" level. It's important to distinguish, though, that homeownership isn't receding equally for everyone.
Relatedly, this also helps explain why rent where you live has been rising.