Matthew Gardner, chief economist for Windermere Real Estate, writes in INMAN about the role of Millennials and boomerang buyers and the decline in homeownership since the first term of President George W Bush.
Many wring their hands over the decline from over 69% home ownership to today’s low that equals the lows of the 1980s. “If we look at homeownership rates by age, between 1994 and today, the decline in homeowners under the age of 35 is 2.5 percent. A palpable drop, but slight when compared to 35- to 44-year-olds who have seen their numbers fall by 6 percent from 64.4 percent to 58.4 percent.”
Why? Because this group took the largest hit following the housing crash, and many lost their homes to foreclosure.
Many think the salvation of housing lies with the Millennials who will move from their parent’s homes or from apartments, form families and, like the preceding generations, buy a house.
But their lack of growth might well be offset by middle-aged families who are thinking about getting back into homeownership again.
According to RealtyTrac, though millennials have received a lot of attention lately as the generation whose below-normal homeownership rates are changing the landscape of the U.S. real estate market, the boomerang buyers are also responsible.
Boomerang buyers — who are primarily Generation Xers or baby boomers — represent a massive wave of potential pent-up demand that could shape the housing market in the short term even more dramatically. That’s because 700,000 who lost homes are now eligible to buy a home because three to five years have passed. An additional 2.2 million will requalify over the next five years.
Gardner has an interesting take on homeownership: “It’s likely that these so called “boomerang buyers” will become homeowners again, which will do its part to offset the millennial drop and raise the homeownership rate back up to its historic averages.”
Let’s hope boomerang buyers aren’t a contrary indicator, that it’s time to get out. After all, many of those buyers bought at or near the top and house prices crashed. Now home prices have recovered most or all of the decline and they are back in the market.
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