King Solomon advises wisdom at any age – and for an increasing number of Americans, the wise choice seems to be to skip buying a home.
Owning a home was once a cherished part of the largely mythical American Dream – a sign that a person had “made it” as a secure, stable adult. But recent surveys reveal that after hitting a high of 69 percent in the pre-housing collapse days of 2004-2005, homeownership has fallen to its lowest levels in nearly two decades. And despite gains in the long anticipated housing recovery, those levels don’t seem to be bouncing back.
That’s the finding of a new article from The Atlantic, which points out that while it’s fashionable to blame the decline in housing – and many other things – on Millennials, the decline in homeownership can be tracked through virtually all US demographic groups.
Housing numbers have been closely watched since the historic collapse of 2007-2008, when the much-publicized housing bubble, propped up by millions of subprime loans to unprepared homebuyers, collapsed. That crash reverberated throughout the whole economy, affecting jobs triggring a full scale recession..
According to the usual standards, housing markets have improved. More homes are available for sale, home prices are rising and mortgage interest rates are staying low. But that isn’t translating into a significant uptick in homeownership overall.
Millennials – those young adults born between 1982 and 2000 – have been singled out in numerous studies and analyses of consumer behavior as the group most responsible for any declines in the health of housing and the economy in general.
Often characterized as debt-ridden slackers with very little interest in those typical trappings of American adulthood, Millennial are now the largest age cohort in the country. And it’s easy to blame them for a variety of economic ills. As a group, they have less discretionary income than other groups, and they’re less inclined to spend what they do have on things like homes and cars.
Because they tend to move around more and marry later – or skip it altogether, homebuying is low on their list of priorities – even though in a recent survey most declared that they’d be wiling to buy a house . . . someday.
But while it seems easy to link those attitudes to the decline in homeownership, that’s only part of the picture. Other age groups are also skipping home buying in favor of renting or travel – and they don’t seem likely to be going back.
Among the Atlantic’s surprising findings: More Millennials are actually becoming homeowners than their older cousins of Generation X – those in the 35-44 age group. The rate of homebuying among this group is actually lower than among the Millennial group. One reason, according to some economists, may be the size of this age group, not its buying power or attitudes. Today’s fortyish adults were born during a marked trough in US births during the 1970s, which makes GenX a smaller group overall, sandwiched between two larger ones: the Millennials and the Baby Boomers.
Whatever the reason, this group simply isn’t investing in homeownership in large numbers –and that doesn’t seem likely to change. Homeownership is dropping too among older adults, who still represent a high number of homeowners in the country.
Even among those groups – the midlife, the retired and the elderly – homeownership isn’t picking up. Contributing to the decline in these age groups is the desire among retirees to downsize or travel. Yet in many areas of he country, housing is doing better.
Home buying may be down, but renting is in. As people across the demographic spectrum abandon homeownership, the demand for rental housing continues to rise – and that’s creating a different kind of housing revival.
Homeownership may be on the decline – but the need for housing isn’t. Investors, both individuals and investing groups, are able to take advantage of low interest rates and the increasing demand for rental property. As Jason Hartman points out, everyone needs to have a place to live – and investors can be the ones to provide it in a rapidly expanding rental market that includes Americans of every age. (Featured image:Flickr/lgargerich)
Thompson, Derek. “Homeowhership in America Has Collapsed – Don’t Blame Millennials.” The Atlantic. Business. theatlantic.com. 28 Oct 2014
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