Headline-fueled anxiety to spare these days focuses on homeownership rates, especially among young young adults.
This HousingWire analysis from economist Mark Fleming captures the sentiment in a couple of lines here:
“Homeownership rate falls to 62.9%, half a percent lower than a year ago and reaching lows not seen in half a century!”
This is bad, right?
A National Public Radio report from correspondent Yuki Noguchi zeroes in on the demographic take here:
The percentage of people younger than age 35 who are homeowners went from 42 percent a decade ago to just a little more than a third now.
Lawrence Yun, chief economist for the National Association of Realtors, says young people are squeezed from both sides. Rents are increasing even faster than home prices.
And, here's an analysis from Zillow economic analyst Sarah Mikhitarian that sheds further light on the age (and ethnicity) trends in homeownership underlying the broader trends. Mikhitarian's big three takeaways are these:
- Since the housing bubble, older Americans have been more likely to hold onto – or purchase – homes relative to younger Americans, driving up the typical age of the American homeowner.
- Whites continue to have the highest rate of homeownership.
- Even though minorities are still far behind whites in homeownership, Hispanics are increasingly narrowing the gap while the homeownership gap between whites and blacks is slowly widening.
Still, if you tend to worry about homeownership rates, and look at the drop from 42% among young adults to 33% as a doom and gloom scenario, well, don't! Or try not to. We humans worry so often about the wrong things and don't worry about the things we should be anxious about. There are more critical things to worry about today and for the next stretch of this slow recovery.
For starters, you may take heart from one of Realtor.com chief economist Jonathan Smoke's observations in his "Finally, a July to Remember--and to Buy a Home" assessment of housing's recent spate of macro data.
Millennials aged 25 to 34 continue to pick up momentum. They are already the largest buying cohort, but they’re just starting to flex their collective home-buying muscle. Last July, 75% of realtor.com®’s 25- to 34-year-old users were looking to buy a home. This July, that percentage increased to 81%.
Also, you may find Trulia economic analyst Felipe Chacon's take on the very powerful correlation between propensity to own and growing up in an owned-and-occupied home as a child to be helpful as well. Look at the data on how likely it is for parents who owned to help their adult children become homeowners with a down payment adrenaline shot:
When it comes to homeownership it’s not just family that matters. Money, of course, does too. Adults who received no financial assistance from their parents since turning 18 were less likely to own a home than those who did. But even among adults who haven’t received any financial assistance, those who grew up in an owned home were still more likely to own themselves. Someone who is 25 years old and has a household income of $40,000 has roughly a 12% chance of owning a home if their parents rented during all of that person’s childhood. This same 25 year old would have a 29% chance of owning a home if their parents owned during their childhood. A 40 year old with the same income has a 28% chance of owning a home if their parents rented while the same person would have a 53% chance of owning if their parents owned their home.
So, like we said, worrying about rates is unhelpful, and not only that, probably destructive, because it's taking time and attention away from what should worry you most right now, which is your powers of persuasion.
When we say that home building and residential development is a people business, what that comes down to is that it's a you-being-persuasive business. To do that, it takes relationship and trust building, and it takes knowing that homes are less and less like big expensive products these days and more and more like complex and valuable programs, offering not material satisfaction so much as experiential well-being. You've got to persuade buyers out there to be your buyer. You've got to persuade trades and manufacturers out there to be part of your program. You've got to persuade localities and agencies to ascribe to your plan. You've got to persuade your associates to excel.
Let others worry about homeownership rates. Housing's landscape right now is divided in to homeownership "would-be's" and "can-be's" vs. "won't-be's" and "can't-be's." There are enough would-be homeowners and can-be homeowners to make a market, not just in the move-up and second-time move-up and luxury segments, but in the entry-level tiers as well. Homeownership rates mean nothing to those who would-be and can-be a homeowner but can't find inventory, new or used, that they can buy into for their share in the American Dream.