By SHEILA WANG • Standard-Examiner staff
OGDEN — The American Dream may come in different shapes and forms, but it’s traditionally associated with owning a home. Here in Ogden, that dream seems to be vanishing due to rising housing costs and changes in people’s preferences.
The reality is that Ogden has gradually become a city of renters.
Ogden residents owned only 56 percent of the housing units in the city — the lowest homeownership rate in Weber County — and the rest were rentals in 2016, the most recent U.S. Census Bureau data shows.
In contrast, the average homeownership rate for Weber County stood at 72 percent. And the county’s second biggest city, Roy, had 84 percent of owner-occupied homes.
“Ogden, like many other urban centers, is heavily tilted towards renters,” said James Wood, the Ivory-Boyer Senior Fellow at The Kem C. Gardner Policy Institute at the University of Utah.
But it’s not always been like this.
In 2000, more than 61 percent of Ogden homes were owned rather than rented. That percentage has since notably dropped, as the red bar chart shows below.
“It is a similar trend statewide and nationwide since the Great Recession,” Wood said, citing a combination of factors affecting rates of homeownership such as high housing costs, changing housing preferences as well as rising rents.
Yet, Utah is the only state where the homeownership rate has never fallen below 60 percent, the Census Bureau reported.
When it comes to Ogden, the low owner occupancy rate has been partly rooted in its older housing stock.
“As homes age, the trend is to rent them out,” said Ward Ogden, community development manager for Ogden City.
Ogden said when homeowners moved out of their old homes for someplace else, they tended to rent out the homes instead of selling.
The strong incentive for renting came from the rising rents, Wood said.
Rents in Ogden have been on a steady increase since 2012, the Standard-Examiner reported.
As of December 2017, average monthly rent in Ogden stood at $1,038, up by 16 percent from five years ago, according to Zillow data.
Old housing stock in Ogden also resulted in a relatively lower mortgage rate, Wood said. “Homeowners can rent out their homes to cover the mortgage while having an asset.”
It’s not just the existing homeowners who are changing preferences but also those who have never owned a home.
More and more people prefer to rent than to buy, Wood said.
Meanwhile, short-term vacation homes have also been popular in the city, said Brenda Nelson, president of Northern Wasatch Association of Realtors for 2018, citing rental services such as VRBO and Airbnb.
The seasoned real estate agent said she was not surprised at the low homeownership rate since “there are many investment properties in Ogden.”
The city has built almost as many owner-oriented homes as renter-oriented ones from 2010 to 2017, according to the Ivory-Boyer Construction Report and Database.
A column chart below breaks the new constructions down by type. Hover or click on the columns for more information.
As for those who still held dear to the American Dream, it was not easy to enter the homeownership market due to multiple factors such as the inability of saving a down payment, employment history and bad FICA scores.
It would take a median-income household more than six years to save up for a 20 percent down payment for a median-priced home in Ogden if they save 10 percent of their income every month, estimated with the 2016 census household income data and Zillow data.
On the other hand, roughly 30 percent of a median-income household’s monthly paycheck would go towards the rent of a median-priced home in Ogden.
But Nelson said hesitant buyers are going back to homeownership as their credits have improved since the recession.
“Buyers have started to realize how valuable homeownership is,” Brenda Nelson, president of Northern Wasatch Association of Realtors for 2018.
To assist potential homebuyers to enter homeownership market, the City of Ogden has multiple programs in place, including the Own in Ogden Program, Infilling Housing Project, Home Sweet Ogden Program, Home Exterior Loan Program (HELP), Unit Reduction Grant Program, Volunteer Partnership, and Owner Rehab Loans Program.
“Our goal is to significantly improve the homeownership rate,” Ogden said.
Own in Ogden, a loan assistance program has helped more than 1,800 home buyers in Ogden in the past 30 years.
In 2018, the city is expected to provide 45 zero-interest down payment loans to home buyers. So far this year, 18 Ogden home buyers have received the loans.
Every year, Own in Ogden receives over $300,000 from the HOME Investment Partnership Program, a federal block grant program for affordable housing activities through the Department of Housing and Urban Development. The process and requirement of application is available here.
An interactive map below shows the more than 1,800 affordable homes purchased with the assistance of Own in Ogden Program in the past 30 years. Click or hover to get more information.
Acknowledging the increasing demand for rentals, Ogden worried the low homeownership rate would have an impact on the health of neighborhoods and the quality of homes.
He said renters would not maintain their homes as well as homeowners, which would degrade the quality of homes.
While it was not necessarily a bad thing to have a low homeownership rate, Nelson said, “owning a home will always be the American Dream.”
She said people’s lifestyle may being changing, but the dream wouldn’t.
Homeownership is “an American institution,” Grijalva said, because of the social benefits such as nicer neighborhoods and home upkeep, and individual benefits in terms of investment.
“Homeownership might lock you in a location,” Grijalva said, noting that renting could be beneficial to labor markets.
Renting could create worker mobility, flexibility and opportunities for forming new businesses, she said, citing a research paper published by the National Bureau of Economic Research.