Home buying has taken a nose dive and is at its lowest level that it’s been in half a century. However, with the surge in development and construction, many families will be slated to buy, as opposed to rent, within the next 10 years.
By 2024, there will be between 14 million and 16 million new homes constructed, according to the Mortgage Bankers Association. A report will be released Tuesday, August 26, 2015. Of these new homes, 13 million are predicted to be owners, and as little as 3 million will be renters, according to bankers.
The rise of development won’t peak there. The report predicts that as many as 1.3 million additional owner households will be established each year, which is a significant increase since the number of owner households has flat-lined since the recession.
The home ownership rate rose from less than 64% in the late 1980’s to more than 69% in the mid-2000’s before dropping to below 64% again in 2015. According to the report, researchers expect the home ownership rate to rise to 64.8%. (Wall Street Journal)
On the flip side, some economists predict that the home ownership rate will continue to decline given the Hispanic and millennial-markets. Both have low rates of home ownership and have been slow to transition from renting to buying. However, the MBA says this will level off due to the U.S. population growing older and wanting to own as opposed to buy.
Seniors are attributed to the surge in home ownership. Baby boomers are predicted to form 13 million new households with 10 million being owners. Research is finding that many senior citizens are choosing to live active, healthy lifestyles and choosing to sell their previous homes and driving the demand in new housing up.
The forecast is looking good for first-time buyers as well. Coming out of the recession, newly built homes were increasing in square footage, making it difficult to buy a first home. But, now the increase in size has slowed down significantly, making entry-level housing more affordable. A newly built home in 2014 was smaller and averages around 2,460 square feet. Reports show that this is due to the market mix as opposed to changes in home buyer preferences.
The types of homes are also something to be considered in the influx of new home buyers. In 2014, the pace of townhome construction picked up and clocked in 12% higher than the final quarter of 2013. Multi-family apartments are also a source of growth as first-time buyers enter the market.
With the increase in home buying and job market performing relatively well recently, the outlook is looking promising within the next decade for new and entry-level home buyers.
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