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households, but opting to rent instead of buy. Trulia chief economist Ralph McLaughlin said that the dynam- ics of declining homeownership actually could be a good sign for the economy and even the housing market in the long term since new household formation likely “reflects growing confidence of those who were most likely impacted by the foreclosure crisis.” NAR chief economist Lawrence Yun observed that there are more opportunities for Millennials to purchase starter homes than waiting to purchase “dream homes.” “Maybe they need to lower their expectations of what that first home should be or settle for a smaller home in a different neighborhood,” Yun said. This suggestion may not necessarily be an acceptable alter- native for a generation willing to move to advance profession- ally and that has a distinct affinity for urban living, but as more Millennials have children and those children approach school age, this preference may change. The National Association of Home Builders (NAHB) reports that developers, at least, are not banking on an ongoing pas- sion for apartment living. The association’s economist, Robert Dietz, is predicting “little growth in multifamily construction this year, with renewed emphasis on single-family homes.” Whether those homes become rentals or owner-occupied remains to be seen. •
ARE MILLENIALS MISSING OUT BY CONTINUING TO RENT?
As more and more Millennials opt to wait to purchase their first home, analysts say that they are also delaying access to the “most impactful contributor to consumer wealth since the great financial crisis.” Brad Friedlander, managing partner at Angel Oak Capital Advisors, noted that the growing wealth gap be- tween homeowners and renters is “largely due to home equity.” Individuals who delay purchasing a home and beginning to accumulate equity could affect their finances “for years to come,” speculated the National Association of Realtors (NAR). According to the Federal Reserve, U.S. homeowners cap- tured more than $12.7 trillion in home equity by the end of the second quarter of last year. This is the highest amount of equity amassed since the end of 2006.
By comparison, renters are also dealing with record-high amounts of money, but that money is flowing out of their bank accounts via rents that are 20 percent higher than they were six years ago. Economists warn that the failure of younger Ameri- cans to take on home ownership is leading them to fall behind finan- cial benchmarks that older genera- tions have met. Although obtaining financing for a home is certainly a significant road- block for many younger would-be homeowners, the bigger issue may be simply that the Millennial generation has opted to delay – or perhaps opted out entirely – of owning homes due to
SOURCE :: Carole VanSickle Ellis
PEOPLE IN THE NEWS RODNEY HALFORD is THINK REALTY’S new Vice President of Media Sales. Halford has decades of experience in advertising—in print, broadcast and online—particularly in B2B sales. Most recently he was senior account executive for KMBC/ KCWE-TV in Kansas City, Mis- souri. Prior to that, Halford worked for Time Warner Cable Media, Com- cast, The New York Times Regional Media
different lifestyle preferences that lead them to seek out com- munity-based living and more flexible options for establishing their households. Also, many reports indicate that Millennials often prefer to wait to purchase a home until they can afford a permanent one rather than opting to purchase a “starter home” that might be sold in five or 10 years. Despite programs intended to bring new buyers into the marketplace, homeownership is still at its lowest in more than four decades. At the midpoint of 2016, fewer than 63 percent of Americans owned their own homes, down from 63.5 percent the previous quarter. Economists speculated that the decline in homeownership could be due in part to an increase in household formation as a result of Millen- nials leaving their parents’ homes and forming their own
Group and Asheville (N.C.) Citizen-Times. He can be reached at 816-298-6122 or 816-985-7726 or by emailing rhalford@thinkrealty.com.
MICHAEL CIABURRI , principal at WORTH AVENUE CAPITAL , recently was featured in a story in The Greenwich
8 | think realty magazine march :: april 2017
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