Did you catch the Cover of Barron’s magazine? “Renter Nation - The recession and shifting demographics will swell the ranks of people who will rent, not buy, housing over the next five years.” I can hardly wait to talk to you about this tonight. (Here for Details).
Here are the highlights:
Most U.S. households own the dwelling they live in, and that isn’t likely to change. But demographic and economic forces, together with some perversities of government policy, are combining to push the share of ownership back to where it was in the early 1990s.
Already, in the wake of the housing bust that brought on the Great Recession, the share of U.S. households owning homes has slid steadily—from 69% at its peak in 2004 to 67.2% in this year’s first quarter. And the rate is likely to fall to its 1993-94 level of 64% by 2015.
The flip side of this trend is a rising rental rate, which probably will hit 36% by 2015, versus 32.8% in 2004. Every percentage-point increase represents nearly 1.3 million households, and the average household includes more than two people—so roughly 10 million extra folks could be moving into rentals over the next five years.
Why? From now through 2015, the long slog that will unfortunately characterize the economic expansion will bring slow growth in jobs and wages. That pace of improvement should be just strong enough to permit new households to form, but not robust enough for the members of those households to afford to own homes. In addition, lax lending standards, fraud and predatory lending practices— key factors in the unrealistic bubble in home ownership in the mid-2000s and the subsequent debacle—appear to have become rarer, at least temporarily.
Demographics also will deal home sellers and builders a clear blow. Not surprisingly, the home-ownership rate tends to rise with age. For example, while the overall U.S. rate is 67.2%, the rate for households headed by someone under 35 is just 38.9%.
Experts project substantial growth in households formed by people under 35, who mainly rent rather than own. Worsening the shift will be a decline in the number of households led by people 35 to 49 years old—the very ages when there is normally a huge jump in ownership. Francese does expect a rise in households led by people 50 and older, but the boost to ownership from this won’t be great. Home-ownership rates tend to level off when Americans reach their late 40s and early 50s.
I can hardly wait to share what Apartment Investor Expert Michal Ballard, and his clients are doing right now, in our last “Making Huge Profits Investing in Apartment Foreclosures Webinar” this Wednesday at 6pm Pacific (9pm Eastern). They have some incredible insight on Why NOW is the Right Time to Invest in Apartment Foreclosures and exactly HOW You Can Get Started… without using any of your own cash or credit. Make sure you Register HERE quickly as we are running out of space and this is our LAST CHANCE to hear Michal Live! Or Call 800-310-7730 x2 Now. Talk to you Wednesday!
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