Where is the Dream of Home Ownership Right Now?

Millions of Americans, and in particular, Millennial and Gen Z buyers have dreams of starting a family and buying a home that can support a family.

Yet, statistics and polls show that blissful vision of ownership may be gone forever.

In fact, more Americans, Canadians, Brits and Aussies face a future where even renting a home is in question. Despite the rising tide of homelessness, poverty and despair, governments aren’t acting to build family homes, lower costs, and support the dreams of the largest segment of the population — Millennials.

Right now, in the US, renting is in, and it looks like it will be in vogue for many, many years. For investors, it’s a difficult value proposition too, yet by building a foundation on good property management software, rental properties are a strong investment — one essential to people and the economy.

Renting is Cheaper and the Only Option

This chart from NerdWallet reveals renting is much cheaper, and many Americans, Canadians, and Brits are relieved it is. Now the challenge is where to find a rental for $2000 a month.

Rent vs Buy Calculator. Screenshot courtesy of NerdWallet.com

Will Home Prices Fall?

Every year there’s talk of falling home prices, yet they haven’t transpired.  There is talk of declining interest rates from central banks, but there is also the belief that inflation will return as the economy is allowed to recover. Without supply, home prices cannot fall.

Here are some sobering stats to consider:

• millennials (24 to 42 years old) have been the top group of buyers since 2014, yet saw their share fall from 43% in 2021 to 28% last year
• wealthy Millennials however will have enough money to bid up home prices
• half of renters don’t believe they will ever own a home
• wealthy boomers are competing for homes, and 2nd homes
• one third are paying most of their income for rent, utilities and taxes
• billions in student loan repayments have restarted after 4 years of forgiveness
• food prices have rocketed and many renters are borrowing from family to pay their rent
• home sales are reaching record-lows
• typical age to buy a first home is now 36 years old

Zillow — Home Prices to Rise 6.5% by July

Zillow in their housing market report says home prices will climb another 6.5% year over year to July 2024.

The US FED hints that it’s “higher for longer” for interest rates, which is likely since if the economy resumes, home prices will be bid upward. And more homeowners will be locked into their current low mortgage rate, unable to sell. Persistent 8% mortgages are likely and home loan qualification will tighten.

Currently, many millennials have dropped their home search due to mortgage qualifying, high prices, unaffordable mortgages, job insecurity and fears of a recession.

With the US headed to war while signaling it can’t pay the interest payments on a $34 trillion dollar government debt, it’s disheartening to everyone.

Can Landlords Save the Day?

Landlords have stepped in to help people have a place to live, and that should be appreciated.  Landlords keep the housing market moving forward, to the next phase.

Builder confidence fell for the third straight month to 40 vs September’s reading of 44 — from the National Association of Homebuilders (NAHB)/ Wells Fargo report.

Predictions for the Next 5 Years

With so much political uncertainty, it might be impossible to forecast home prices and mortgage rates. One fact remains, is the severe shortage of housing available, and how difficult it is for builders to build.

One wild card is the November 2024 election. Yet, if the Republicans win the election and reduce regulations, ease borrowing costs, and cut taxes, will it be enough to house tens of millions of people seeking housing to suit their needs?

It’s likely that investments in rentals will pay off for investors. Even under massive building efforts, there are many who will never allow real estate holdings to plummet in value.  Thankfully, landlords are saving the day, and likely will still be in 5 years’ time.

See more of the advantages of ManageCasa for reducing the cost of managing your properties.

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