According to Freddie Mac’s June edition of Outlook, homeownership could fall to as low as 50 percent over the next few decades, if current trends continue. While homeownership hit a high of 69 percent before the housing crisis and Great Recession, a significant decline followed, reaching a 40-year low not long ago.
Although economists find 2016 promising, homeownership remains around 64 percent and is predicted to drop, possibly reaching 50 percent by 2050.
There are several contributing factors to the decline, according to Freddie Mac’s report, including:
- The market price for both owning and renting continues to outpace inflation. As a result, fewer individuals can save up for a down payment.
- Home prices are often higher than a region’s relative income which, when adjusted for inflation, has remained flat since 1996.
- Rental rates prevent individuals from saving up for a down payment, which puts homeownership out of reach for many.
- Many Millennial and Gen X buyers are saddled with high amounts of student debt, in addition to rising rental costs. As a result, homeownership and starting a family can get put off for several years.
- Tighter credit restrictions after the housing bubble have blocked out several individuals from homeownership, either because of credit score, debt-to-income ratio or other factors related to self-employment.
- For low-income buyers hit hard by the housing bubble, homeownership attitudes changed after the Great Recession. Since many individuals know someone who lost their home due to unscrupulous lending practices, owning property is seen as a less-secure path to building wealth.
- Multi-generational households are becoming more common because of the expenses associated with owning a home and shifting U.S. demographics.
- Trends aren’t easy to reverse. Unless a seismic economic shift occurs, they’re expected to continue down this path.
Are you in a secure financial position to purchase property and considering Central Connecticut as a location? Whether you’re looking for large or small, explore custom homes through By Carrier. For more information about our communities, contact us today.
