Washington, DC, May 20, 2013 --Washington, DC, May 20, 2013 --The shape of home ownership and housing markets has changed dramatically over time and will continue to change in the face of new housing opportunities and challenges.
That’s according to panelists at the “Challenges and Opportunities in Housing and Homeownership” session today during the Realtors 2013 Midyear Legislative Meetings & Trade Expo.
“The residential mobility rate in the U.S. has been falling steadily since the 1990s, when it was approximately 20%, to its current level of 12%,” said National Association of Realtors Chief Economist Lawrence Yun.
“The decline is unwelcome news since it may imply a reduction in economic mobility. Mobility is currently being impacted by the lack of housing inventory since fewer homes are available. In the future, proposed regulations requiring larger down payments could also significantly reduce mobility since fewer homeowners may be able to afford a home.”
Lisa Sturtevant from George Mason University’s Center for Regional Analysis said that home ownership rates have declined fastest for millennials, most likely the result of fewer job opportunities and higher student debt
"However, I believe they still want to become owners and will eventually make their way into the housing market,” said Sturtevant.
“When they do enter the market they’ll care about different things than previous generations too; I foresee more single people buying smaller homes in urban areas.”
Yun agreed that the recent housing downturn hasn’t change younger buyers’ attitudes about homeownership, despite many of them delaying their entrance into the market.
“Rather, reduced home prices and lower interest rates have provided an opportunity for younger buyers to affordably enter the housing market,” he said.
James D. Shilling from DePaul University’s Institute for Housing Studies said that higher home prices will unlock a large number of households with negative or low equity and incentivize them to get off the sidelines and into the housing market. However, combined with future increases in interest rates, the net effect is likely an overall reduction in residential real estate transactions and household mobility.
He anticipates the Federal Reserve will keep mortgage rates low through 2013 and most likely into 2014.to 2014.