By Jeff Harding
In my predictions of the future found in Good News vs. Bad News: Which Do You Want To Believe, I said, “Home ownership rates will return to historic norms of about 65% of the population, down from the historic peak of almost 70%.”
An article in today’s USA Today, reported on this issue:
The rate of homeownership is forecast to keep tumbling in the next decade to lows not seen since the 1980s, a trend that could redefine a key element of the American dream even after the housing market recovers.
The percentage of households that own homes hit a peak of almost 70% in 2004 and 2005. By the second quarter of this year, that slipped to 67.4%, according to the Census Bureau. Now, a University of Utah analysis projects it’ll drop to about 63.5% by 2020 — the lowest since 1985. …
“We’re returning more to what was normal in the 1960s,” says Dowell Myers, housing demographer at the University of Southern California. “People didn’t buy homes then as an investment. They bought them to raise families.”
The main reason for their conclusion was, “The youngest of 79 million Baby Boomers will turn 56 by 2020 and many will be empty nesters who favor small homes. The 20-something millennial generation is at a peak age for renting.” Also they noted that it’s harder to finance a home.
This is not a trend home builders, home lenders, and home owners want to see since it puts further pressure on home prices. My guess is that they may be a bit premature on the concept that people will not view their homes as an investment. We aren’t going back to the ’60s.