Recently, Jeffrey Gundlach who runs DoubleLine Capital and its $32 billion fund investing in mortgage-backed securities, made the incongruous comment that housing ownership is overrated and that people’s preference, especially the young, is to rent.
Other prognosticators have similarly lamented young people’s apparent lack of interest in home ownership.
Sam Zell, chairman of landlord Equity Residential, the nation’s largest apartment owner, predicts a continuing decline in the rate of homeownership. Richard Florida, writing for The Atlantic, predicts a coming crisis in available rental apartments.
Some say the young just aren’t into owning, with its responsibilities and lack of freedom to move. Others say heavy student loan debts, which have tripled in the last 10 years according to the New York Fed, are holding them back.
There is no question recent college graduates have been impacted by the most severe recession since the 1930s. But the future bodes well for those who have educated themselves.
In 2012, a record 33 percent of our population ages 25 to 29 had at least a bachelor’s degree compared with 17 percent in 1971, and 63 percent had completed at least some college, according to the Pew Research Center. The value of that college degree is holding up well. The 2012 difference between it and a high school diploma in annual full-time employment was more than 50 percent at $17,500. While the younger Americans recover along with the rest of us, there ability to buy a home will also improve.
So, what do they want to do? According to a National Housing Survey recently conducted by FannieMae, 90 percent of renters ages 18 to 39 plan to buy a home at some point in the future. A survey by BMO Harris Bank found that of Millennials, ages 18 to 34, 74 percent plan to buy a house in the next five years and 32 percent say they plan to purchase in the next 12 months.
While the future is always uncertain, the stars are lining up for U.S. housing to be in demand for many more years.
— Ed Fuller is a real estate broker with San Roque Realty Inc. and president of the Santa Barbara Association of Realtors. Contact him at ed@sanroquerealty.com or 805.687.1551. The opinions expressed are his own.