Anyone who has been paying attention to real estate sector news knows that American homeownership rates — actively declining for over ten years — are now at a half-century low. Combined with financial turmoil both international (Brexit) and domestic (a contentious Presidential election, TRID-spurred compliance issues), many mortgage and property professionals are predicting a pessimistic future for the country’s housing market. But are things really as dark as they appear?
By the Numbers
The late 90’s through early 00’s housing boom brought national homeownership rates to a dizzying 69.9% in 2004. The subsequent financial crisis brought that figure down to record lows, and it currently hovers around 63% — a recovery, but not a full one. The decline has triggered significant debate among economists, with particular interest in the fact that it has all but erased any gains made by populations who have historically disadvantaged in this area. Given that the American population is rapidly diversifying and expected to hit “majority minority” status within the next few decades, experts are wondering when — and if — the homeownership gap will be closed.
While these data points may be troubling at first glance, statisticians are quick to point out that they are actually not all that dire by historical standards. National homeownership rates stayed well under 50% for the first half of the 20th century, only rising to their contemporary range after a confluence of factors like the GI Bill, a post WWII economic boom, the creation of the Fair Housing Administration, and the widespread institutionalization of the fixed-rate mortgage.
The essential assumption behind any forecast of the future is that it will resemble the past. But as history shows us, new factors that are as-of-yet nonexistent can have consequences beyond current models’ scope — in fact, they are literally unpredictable. As the country struggles with the issues that perpetuate social and economic inequality, it’s entirely possible that new solutions will emerge to help close the racial housing gap. Millennials, often chastised for their refusal to “grow up,” may begin to start families and purchase homes at rates comparable to their predecessors. The fate of government-sponsored enterprise (GSE) mortgages is currently under consideration by Congress, with no consensus on how housing finance policy may look in the coming years.
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