Was the Housing Collapse just a Warning Shot?
It has been five years since the height of the market, and the housing industry is still trying to fight its way out of the downturn. The recession and unemployment have already placed severe pressure on homeownership rates and now the industry may actually be facing another major hurdle.
Here’s the problem. Baby boomers are getting older. Generation Y is now approaching the age in which Boomers bought their first home. Yet Generation Y doesn’t attach the same value as Baby Boomers do to owning a home. So what happens if they don’t buy – at least, not in the same numbers?
Technology, demands, and interaction styles are rapidly changing and what people want is substantially different today than 30 years ago. So if Baby Boomers in large numbers want to sell off their homes, and the incoming Gen Y does not buy it in the same numbers, we may have a significant shift in demand vs. supply.
The country’s two largest demographic groups – the Baby Boomers (78 million) and Generation Y (73 million) are playing a game of checkers, exchanging pieces of power with one another left and right. This shift is occurring as each generation reassess their priorities, searches to resolve changes in styles and demands, as well resolutions for economic limitations.
A senior resident fellow at the Urban Land Institute, John McIlwain says that the largest concern with Generation Y is that with a 30% unemployment rate and an average of $23,000 post-college debt, the majority isn’t saving for a down payment, and their parents – mostly Baby Boomers – are struggling to recover their own retirement savings.
I am a Gen Y and although I want my own home, one-day, my idea of a home is not suburbia. It is not a small patch of land with a white picket fence, two dogs and a cat. The world is my oyster and I have places to be, things to do, and oh yeah, not to mention debt to pay off. So adding in a mortgage loan is not appealing – renting sounds easier, simpler and more fitting.
Like our parents who sought a better life – the American dream, the white picket fence – that saw the struggle of the silent generation through two wars and the depression. We too are seeking a better life. We want a life that is not falling under the weight of the white picket fence. As Gen Y, we have grown up with technology. So most of our lives are digital and online. Our home is our laptops, our iPods, our Smartphones, our Facebook pages.
The US Census Bureau shows that homeownership rates have fallen nearly three percent (3%) since those sunny days before the crash. We are down from 69.2% to 66.9% and if we stay on our current course, we’ll be well on our way to the beat the lowest levels of homeownership seen in decades.
We have all the makings for a journey down the rabbit hole, much like Alice in Wonderland. Only this time, she’ll be saying “There’s no place called home.”
About the Author
Tinus (24) is the eldest son of Stefan Swanepoel, author of the annual Swanepoel Trends Report. He serves as Publications Manager for RealSure, Inc. and also is part of the research team for the annual report. His background includes two Bachelors of Science and a minor in Management. Tinus enjoys expressing his creativity in design and considers himself a big dreamer and a problem solver.
For more information on products he’s involved in, go to http://www.retrends.com.