There are two categories of people that are of particular interest to future housing trends: foreign-born citizens and the millennial generation. Let’s have a look at each.
FOREIGN-BORN HOME BUYERS
According to the U.S. Census Bureau, 52% of foreign-born householders owned their homes in 2011. In contrast, about 67% of native-born householders owned their homes.
“Homeownership is a goal shared by many residents of the United States, both native- and foreign-born, citizen and noncitizen,” said Elizabeth Grieco, chief of the Foreign-Born Population Branch at the Census Bureau. “For immigrants in particular – who maintain nearly one in seven households in the U.S. – making the transition from renter to homeowner represents a significant investment in the United States.”
This report found that foreign-born naturalized citizens were more likely to own their homes than foreign-born noncitizens. In naturalized citizen households, 66% were owner-occupied. That compares with 34% of noncitizen households.
Rates of homeownership among foreign-born households also increased with time spent in the United States. Among foreign-born households with a householder who entered the country before 1980, nearly three-fourths were owned rather than rented. Among households headed by someone who entered the U.S. since 2000, only one-fourth were owned.
According to the brief, just 10 metropolitan statistical areas accounted for about half the nation’s foreign-born households in 2011, led by New York and Los Angeles, each of which had more than 1 million foreign-born households. Rounding out the top five were Miami, Chicago and Houston.
MILLENNIAL HOME BUYERS – OR WILL THEY ALWAYS BE RENTERS?
Turning to “the kids,” conventional wisdom today around the millennial generation, often defined as having been born between 1980 and 2000, seems to be that they aren’t as interested in owning a home as previous generations. Recent stories in the media go so far as to claim that the dynamic, diverse people in this group prefer the flexibility of renting to the stable, long-term arrangement provided by home ownership.
But one group begs to differ. Dr. Glenn Crellin, a professor at the Runstad Center for Real Estate Studies, University of Washington. D.C. says that this is a misinterpretation of present-day trends.
It is true that the home ownership rate among the under-35 population in 2011 was just under 40% (compared to the national rate of approximately 65%), and that home ownership levels had declined more sharply among those under 35 than among other groups since the housing bubble burst. But he said many in the media were drawing the wrong conclusions from that data.
“Recently, headlines showed the general press believed we were entering an era of rentership,” Crellin said. “[As a result], they believe home ownership doesn’t deserve the kind of support it had been given.”
But Crellin pointed out that the rate of home ownership for those under 25 today is actually higher than that of the under-25 baby boomers in 1970. Also, a recent poll of Washington State University students that he conducted showed that 48 percent of them expect to buy a home in the next 3-5 years. While the willingness of young people to purchase a home is certainly there, the financial means to do so may not be, Crellin said. The underlying story, then, is not one of shifting mindsets but rather changing economic factors.
“[The recession] is probably going to delay purchases, but it’s not the permanent transition that the national press is predicting,” he explained.
Let’s hope so. Here’s more on millennial and rent vs. buy topics…
– Here’s What’s Holding Millennials Back From Housing (ConvergEx via Josh Brown)