The right-hand tail of the fever-chart spikes up, ever so little, but up, nonetheless.
There, we see it: homeownership among 30 to 34 year-olds rose by 1.6 percentage points during the July through September period.
Reasons cited include solid job growth in that age group for months leading up to the third quarter of 2015, plunging unemployment, dirt cheap interest rates, opportune pricing, sky-rocketing rents, and, well, growing up.
Question is, is this a one-time blip, or is it a new direction for homeownership among younger adults? Is this the beginning of a wave?
First off, the increase in homeownership among households headed by people ages 30 to 34 nested in a broader "not-seasonally-adjusted" overall uptick in homeownership that reversed a gravity-bound trend essentially dating back to 2005. Here, Wall Street Journal staffers Laura Kusisto and Kris Hudson tap Moody's Analytics chief economist Mark Zandi to speak from his vantage point on homeownership patterns. We've bottomed, Zandi suggests, but don't look for any massive V-shaped tipping point back upward.
“I don’t expect any significant increase any time soon, but I think we’re finally at bottom,” he said.
Wonkish observers of government data hold a particular suspicion for the accuracy of these numbers, but generally accept them as directionals. Calculated Risk host poster Bill McBride notes:
This survey might show the trend, but I wouldn't rely on the absolute numbers. The Census Bureau is investigating the differences between the HVS, ACS and decennial Census, and analysts probably shouldn't use the HVS to estimate the excess vacant supply or household formation, or rely on the homeownership rate, except as a guide to the trend.
What's more, the good news about Millennials and homeownership comes as a deja vu all over again moment. New Strategist Press editorial director Cheryl Russell reminds of this in a good-news-maybe-not-so-good-news post from her demographic perch in Ithaca, NY.
A similar uptick occurred in the last half of 2014, followed by a plunge to record lows in the first two quarters of 2015. The rise in homeownership could be nothing more than a bobble at the bottom, or it could signal emerging vitality in the housing market.
Historically, homeownership became the norm in the 30-to-34 age group—rising above 50 percent. But beginning in 2007, the homeownership rate of 30-to-34-year-olds went into a tailspin. In the second quarter of 2011, the rate fell below 50 percent for the first time. It's been stuck there ever since.
Vanguard millennials (those in the 30 to 34 age-range) in the uppermost quintile economically, the ones with the good jobs, and fast-progressing career paths probably account for a good percentage of the cohort's early adopters of homeownership. Too, those who've done military service and have access to VA loans and want "out" of the rent vicious-circle.
Of late, we've gotten word of the declining importance of all-cash purchases as a share of home buying totals in both existing and new home categories, which means that access to the home mortgage markets may be changing from a flicker to a steady beam.
Here at BUILDER, we're of the persuasion that demand for homeownership among individuals and households in this 77 million-strong generational cohort will--roughly--match that of earlier generations, to the tune of about 64% to 66%, give or take.
Tactically, to play the significant part it has in the past, the new home construction industry has but two levers to draw on as a role-player. One, is to buy lots and bring them online at a favorable price-point. The other is to build fast, and right the first time.
The cost of place and the cost of time (vs. the real, not imputed, revenue from actual transactions) are the two big impediments to ensuring that the spike in homeownership among 30 to 34 year-olds is a trend and not a blip.