“That would be MikeHeraty@frontier.net”
The percentage of Americans that own their homes is declining slightly. Some housing economists are predicting the percentage of homeowners will decline from the current level of 64.4% to 55% within a few years. Others are not as pessimistic, but the majority of analysts believe a big factor in the equation is the homeownership choices of Generation X and Millennials. Though many within this group still believe in the value of home ownership, some lack the down payment and credit scores needed to become homeowners. Some site student loan debt and the hangover effects of the earlier housing recession.
Others see different trends in the data. Millennials tend to be more mobile in terms of relocating for job opportunities- relocating from Denver to Seattle for example, and therefore less interested early on in their careers in anchoring into an area as a homeowner. By renting they are more easily able to take advantage of better job opportunities.
Still another reason given for the decline in new homeowners is misinformation. Some Millennials believe they need a cash down payment of 20%. This is not true. In fact, there are lending programs that permit down payments as low as 3%. This is information that those of us in the Realtor and banking community need to do a better job of communicating. While it is true that higher credit scores are required than was the case in the last decade, there are still a number of good viable loan programs that enable younger people to qualify with little cash down.
So long as the cost of renting in markets does not drift significantly below the month cost of owning, there is little to fear this trend will noticeable impact the near term value of homes. If however, renting became much cheaper than owning, home values would begin to be decline, all other things being equal. Given the cost of new construction today, it is doubtful we are likely to see a huge supply of cheap rental housing flood the market creating a wide margin between the cost of renting versus owning.
Here in Southwest Colorado, local members of the Community Development Corporation and other interested stakeholders are working hard to find ways to attract more Millennials to the area. Housing affordability is not an issue in Pagosa as compared to other mountain communities such as Vail, Aspen and Telluride. Entry level homes can be acquired for $200,000-$250,000 with condos and townhomes available from $100,000.
For information on real estate and related topics in Southwest Colorado, give me a call at 970 264-7000, or email me at: MikeHeraty@frontier.net.
Thanks for reading-Mike
