The value of owning a home in the U.S. has never been greater, at least according to one figure buried in a monthly Commerce Department report.
The share of Americans' total personal income coming from rental profit rose to a record 4.4 percent in the first quarter of 2016, data released in June show. That's at an all-time high in figures dating back to 1947, and is up from just 0.7 percent thirty years ago.
Rental income includes landlords' profits, according to the Commerce Department's definition. What's perhaps less obvious: It also includes how much owner-occupants would make if they rented out their house or apartment, after accounting for expenses including mortgage interest and property taxes or insurance.
As a result, the data offer a nice gauge of how much homeownership is worth versus other income sources, like wages or transfer payments. The figures underline an important trend — homeowners who escaped foreclosure during the financial crisis have made out in the years that followed, while renters have faced a difficult road.
Two economic trends are at play here. First, historically low mortgage rates have cut down the expenses that would eat into landlords' profit. At the same time, tight supply has pushed rental prices in the U.S. up at more than double the rate of other goods and services.
The cost for renting a home grew by 3.5 percent in the year through June, a post-recession high and above overall price gains excluding shelter, food and energy, of 1.4 percent.
"The share of Americans renting their home is now nearing 50-year highs, and this rapid shift has occurred at a time when the rental housing stock has not had ample time to catch up,'' said Ralph McLaughlin, chief economist at real estate search engine Trulia. "Investors have been able to capitalize on this shortfall by taking higher rents."
The strong demand for rental units has become a self-reinforcing trend: Shelling out high rent payments makes it hard for households to save for a down payment. What's more, credit standards are strict, making it difficult for those with less-than-stellar histories to acquire mortgages.
That means even as homeownership becomes a bigger portion of Americans' total income, it is also increasingly exclusive. The U.S. homeownership rate fell to 63.5 percent in the first quarter, holding near a 48-year low.