The “American Dream” could be on the verge of a rebound for
some. The home ownership rate for young Americans will probably increase over
the next decade to close to 60 percent from below 40 percent in 2016 as their
incomes increase and they start families, according to Freddie Mac estimates.
The data track two cohorts: Americans who were between the ages of 25-34 in
2016 and those who will be in that age group in 2025.
Freddie Mac determined:
- The
home ownership rate of young adults will probably rise to 58.1 percent in
2025.Under a more optimistic scenario, the ownership rate could rise as
high as 60 percent; in a pessimistic scenario, 55.9 percent. A percentage
point can translate to more than 500,000 more home purchases.
- The
self-employed are five percent more likely to own a home. Higher levels of
wealth are correlated with being self-employed.
- There’s
five percent less chance of affording a home in a metro area versus
elsewhere.
- An
estimated 700,000 young adults refrained from buying a home between 2000
and 2016 because costs outpaced incomes.
Subdued
Paychecks aren’t keeping up with home prices, keeping home
ownership down
“Historically low mortgage rates and increasingly favorable
employment conditions should have generated a far greater number of home
purchases by young adults, especially in the last five years,” said Sam Khater,
Freddie Mac’s chief economist. “Unfortunately, home-price and rent growth above
incomes -- driven primarily by a severe shortage of housing supply -- have been
too high of a hurdle for many would-be buyers to clear.”
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