On the Future of Housing
Two sweeping changes are in store for the
housing market over the next 15 years— a
surging rental market and a decrease in the
home ownership rate, except for those who
are older than age 75. Policy changes will be
critical for addressing both.
What the Data Shows
By 2030, the home ownership rate is
expected to drop to 61.3 percent (from
65.1 percent in 2010 and down from its
peak of 69.2 percent in 2004), as more
renter households are formed, according
to Urban Institute’s 2015 research report,
“Headship and Home Ownership: What
Does the Future Hold.” California has
steadily been seeing its home ownership
rate decline, reaching 54.9 percent in 2014.
“When you look at the downward trends in
home ownership, there are a lot of factors,”
Goodman described. She points to factors
like the growing share of minorities in the
population who traditionally have lower
home ownership rates; the tightening of
credit availability; the still-lingering shadows
of the foreclosure crisis and recession; as well
as the delayed marriage rates and apparent
shift in attitude about home ownership
among Millennials (e.g., by the time
Millennials reach their prime home-buying
age in 2030, only 38 percent are expected
to own homes, well below the 46 percent of
baby boomers in the 1990s). ship has traditionally represented their main
avenue of wealth accumulation,” Goodman
said. “But people of almost all age groups are
changing their behavior and economic realities
are making it more difficult to save for a
down payment and to qualify for a mortgage
to become a homeowner, resulting in higher
numbers choosing renting over owning.”
The Challenge Ahead
Many owners continue to be shut out of the
market due to tight credit standards, but that
comes at a time when housing is still relatively
a good buy by historical standards. Housing
is considered “slightly undervalued” nation-
wide—more affordable now than compared
to the 2000 to 2003 period. That is mostly
attributed to low mortgage rates. Even if
interest rates rose to 6 percent (they’re cur-
rently at about 4 percent), affordability will
fall back in line with 2000 to 2003 levels,
considered a relatively stable period for
housing prices, Goodman notes. (Of course,
California holds some pockets of exception
due to high demand areas where prices have
soared.) “For most people, home owner- Policy Recommendations
Policy changes that set out to expand credit
access can help draw more people to home
ownership in the coming decade. Sure, “there
are many households that will never buy and
that proportion is growing, and many who
lost their homes in the foreclosure crisis have
no desire to buy again, even if financially
they are able to do so,” Goodman suggested.
That said, “by expanding access to credit and
programs to support rental housing construc-
tion, focusing on the needs of senior renters
and addressing underlying income and
wealth challenges we’ll have a healthier hous-
ing market for renters and owners by 2030.”
GILROY • MORGAN HILL • SAN MARTIN
JULY / AUGUST 2016
By Roger Cruzen, C.A.R. Magazine
gmhtoday.com
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