Baby boomers – those born between 1946 and 1964 – have steered economic trends for decades and have the highest rate of homeownership in the country, approximately 80 percent. Now, as the oldest members of the generation edge into their 70s, they are deciding to stay in their homes. According to a Realtor.com housing shortage survey, boomers have the least interest in selling their home. Approximately 85 percent of baby boomers surveyed indicated they are not planning to sell their home in the next year. The main reason, according to the survey, is that their current home meets the needs of their family.
In March, the housing market continued to underperform its potential. Actual existing home sales are 4.5 percent below the market potential for home sales, according to our Potential Home Sales model. The lack of supply is the primary culprit. The inventory of homes for sale in most markets remains historically tight, yet demand continues to rise as millennials further age into homeownership. Limited supply and rising demand means house prices are surging, so why aren’t more existing homeowners selling their homes? Two market dynamics are at play.
It’s a popular myth – the millennial generation is destined to be a generation of renters – avocado toast, anyone? With student loan debt burdens, the scars of the Great Recession, and limited housing supply, the myth is rooted in some real challenges for millennials. However, despite these challenges, millennials are not only interested in homeownership, they are the primary reason that the homeownership rate increased over the past year.
We’ve posted the annual First American Homeownership Progress Index (HPRI), which measures how a variety of lifestyle, societal and economic factors influence homeownership rates over time at national, state and market levels. The HPRI declined 0.4 percent year-over-year, and is down 6 percent from the pre-recession peak. Potential homeownership demand is at the same level it was in 1990.
Homeownership is a goal shared among all people, regardless of race or ethnicity, and remains the main driver of wealth creation for the majority of households in the United States. That is why it is vital to understand the underlying characteristics that influence the probability of homeownership. Over the last several months, my research has explored the influence of marital status and family formation, education, income and economic factors on homeownership rates. Today, I examine how ethnicity impacts the probability of homeownership.
Spring break is fast approaching, that playful time of year when beach cities are inundated with college students and tourists. As housing economists, spring break is exciting because it coincides with the beginning of the spring home buying season! While we may not seem to have much in common with the college crowd, there is an underlying connection: education.
The spring home-buying season is right around the corner. As we reflect back on the spring of last year, it becomes clear that we were spoiled in 2016 with mortgage rates well below 4 percent at the beginning spring, and flirting with record lows at 3.4 percent in the summer. This year began with mortgage rates at 4.25 percent, and concern mounting that mortgage rates would rise further this spring. Despite the higher mortgage rates, the most recent January existing-home sales numbers increased dramatically, surpassing a recent cyclical high and increasing to the fastest pace in almost a decade. This represents a potential trigger moment in housing. While inventories remain very low, and median home prices are on a 59-month streak of increases on a year-over-year basis (7.1 percent), home sales remain robust. Could the strong home sales signal a pending broad upsurge in the desire for homeownership?
For Valentine’s Day, we pondered the question, could more love lead to an increase in homeownership? This is a serious question because marriage and homeownership, perhaps the two most enduring institutions of our society, have shaped the economic fortunes of many Americans.
No matter your life stage, ‘tis the season to pack up your stuff and head home for the holidays. Home is where we congregate with family and friends over a hot meal, catch up on events, and maybe even ring in the New Year. But, home does not look the same for all. In fact, “home” doesn’t have to be the white picket fence with the smoking chimney in a quiet suburban neighborhood. Increasingly, for Millennials, home may be a rented apartment in the middle of the city.
It’s that time of year again. The time when we come together and celebrate the American tradition of giving thanks for the many blessings in our lives. Often we give thanks for having the basic necessities of life: food, health, water and shelter. While all of these things are vital to human existence, as a housing economist, I naturally tend to focus on shelter.