The housing market, along with the economy as a whole, has rebounded, but the scars left behind will keep the property management business busy for years.
Many young people don’t want to be burdened with a mortgage on a house. In fact, a lot of them find that renting not only gives them more freedom and flexibility, it eliminates the fear of not being able to fulfill the commitment of a mortgage.
Clothes, not Homes
According to Neil Howe, author of the book “Generations,” young people will look at the house their parents live in and believe it would take a lifetime to purchase. That generation still wants material things. In a Pew Research Center survey, different generations were asked what made them unique and while those considered baby boomers answered with phrases like “work ethic,” those in their 20s and 30s often said “clothes.” But the key is that many millennials, those born in the early 80s and beyond, believe that in order to obtain those material possessions they need to stay flexible and stay clear of giant financial commitments like mortgages.
Many millennials graduated from college in the heart of the recession when the unemployment rate was at 17 percent, credit standards increased significantly and getting a mortgage was extremely difficult. At the same time, they saw their parents take pay cuts, lose their jobs or even default on their mortgages. These experiences have made them more apt to sign a lease instead of applying for a 30-year commitment on a home.
Numbers Don’t Lie
The percentage of homeowners under the age of 35 dropped over 5 percent from 2004 to 2010 while rental vacancies dropped almost 3 percent over the same time period. Renting, in both apartments and single-family units, has increased a staggering 17.5 percent from 2005 to 2010, according to the U.S. Census.
While the housing market may be looking better these days, the younger generation won’t be buying in anytime soon.
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