The recent reports of the decline in national homeownership have sparked much debate and buzz in the property management and multifamily industry. Has the up-and-coming generation forever shied away from homeownership and placed its faith in “permanently renting”? Or is the current adversity to home buying simply another phase of the current real estate cycle? In the article below, both side are the argument are expressed. What are your thoughts? Has the Great Recession forever scarred the ideal of a home as a “safe investment”? Or is the recent decline in homeownership this just another spoke in the perpetual real estate wheel?
Is the Flight From Homeownership Cyclical or Structural?
By: Jerry Ascierto of Multifamily Executive
The national homeownership rate fell to 66.4 percent at the end of the first quarter—the lowest figure in 13 years—down from 67.2 percent a year earlier.
And that flight from ownership has had a big effect on the multifamily industry’s improving fundamentals. Unlike in previous upturns, the apartment sector’s recovery isn’t being driven by robust job creation or a rapidly improving economy. Where there has been new household formation, it’s been lopsided in terms of how much is directed toward rental housing. Many in the apartment industry are now wondering if that shift away from ownership is structural (permanent) or cyclical (temporary)?
One popular belief—echoed throughout countless multifamily conferences—is that the shift is largely behavioral, that the bloom is off of the rose of homeownership for many members of Generation Y. But this is likely a mistaken assumption. “There’s no evidence at this point to support the definitive thesis that young American households are permanently biased away from homeownership,” says Sam Chandan, global chief economist for New York-based market research firm Real Capital Analytics. “History suggests that this bias is largely cyclical.”