FEATURED ARTICLE: 2019 HOUSING OUTLOOK
DUNCAN: The homeownership rate rose on an annual basis during the third quarter of 2018 for the seventh consecutive quarter, the longest such streak in 14 years. Homeownership rates continue to increase the most for the youngest households. The rate for households 35 years old or younger saw the fourth straight quarter of annual increases at, or exceeding, one per- centage point. We expect that the homeownership rate will continue to improve in 2019 but the pace of im- provement will likely slow from what we saw in the past two years as we expect economic growth to slow and
have eased lending standards, they remain relatively tight. Since the housing crisis, underwriting stan- dards are designed not to just allow households to own a home but to
continued gains in mortgage rates. The homeownership rate will likely remain well below its pre-recession peak, which was fueled by loose lending standards. While banks
“The strong job market and somewhat easy underwriting standards will support more homeownership, but higher mortgage rates and lower housing affordability will constrain first-time homebuyer demand. Much of the large millennial cohort is still a few years away from becoming homeowners.”
DOUG DUNCAN “The homeownership rate will likely remain well below its pre-recession peak, which was fueled by loose lending standards. … Since the housing crisis, underwriting standards are designed not to just allow households to own a home but to help them stay in the home.” looked at young adult homeowner- ship and found significant pent-up demand amongst those ages 25 to 34. As the bulk of the millennial pop- ulation moves towards the higher end of that age range, then home- ownership should tick up. That’s exactly what we saw in 2018: the homeownership rate for households under 35 increased by 1.3 percent- age points from the third quarter of 2017 to the third quarter of 2018. If that trend continues, and I think it will, then the overall U.S. homeown- ership rate should tick up in 2019.
MARK ZANDI
U.S. HOMEOWNERSHIP RATES BY AGE RANGE
historic lows. More inventory choices combined with many millennials steadily approaching the typical age of a first-time buyer of 32 years will allow some to turn the aspiration of homeownership in to a reality. TERRAZAS: We expect the home- ownership rate to increase modestly from 64.4 percent in Q3 2018 to 64.7 percent by the end of 2019. While a rising interest rate environ- ment will slow home sales, large cohorts of young adults are moving toward their core home-buying years. In addition, income growth should remain steady driven by a strong labor market, and we should see more migration toward more af- fordable parts of the country – both of which would push up the home- ownership rate. KIEFER: The U.S. homeownership rate has ticked up in 2018, and I expect that to continue in 2019. We
help them stay in the home. For example, lenders are required to determine and document a borrow- er’s ability to repay the loan, based on a fully amortizing payment. With more prudent lending standards, the homeownership rate should increase as the economy continues to expand but it likely will not rise to the level seen during the mid-2000s. in 2019. The strong job market and somewhat easy underwriting standards will support more home- ownership, but higher mortgage rates and lower housing affordability will constrain first-time homebuyer demand. Much of the large millennial cohort is still a few years away from becoming homeowners. YUN: The homeownership rate will notch up a small gain with first-time buyer activity rising from ZANDI: The homeownership rate should remain largely unchanged
TROUGH HOMEOWNERSHIP RATE (Q2 2016)
PEAK HOMEOWNERSHIP RATE (Q2 2004)
Q3 2018 HOMEOWNERSHIP RATE
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
U.S. Under 35 years 35 to 44 years 45 to 54 years 55 to 64 years 65 years and over
14 think realty housing news report
january 2019 15
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