The top story in yesterday's Globe reported that the rate of home ownership by young people (adults under age 35) plunged between 2005 and 2011. The story cites a number of factors - high unemployment rates among young people, high levels of student debt, for example - to explain this. The story also mentions that house prices peaked in 2005, an assertion with which I disagree. My analysis of Middlesex North sales, at least, showed prices peaking in 2007.
A factor not mentioned in the story that may be contributing to this decline in home ownership could be shifting societal attitudes towards housing. Some observers suggest the age of suburbia is over; that the benefits of a big house and a big lawn in a suburb are fading due to the need to drive everywhere and the sense of disconnectedness that results. Urban living with its close proximity to social, cultural and entertainment opportunities is becoming more attractive.
But for those young people who want to own a home, be it a suburban single family or an urban condo, it would seem to be the perfect time to plunge into the market. Interest rates are incredibly low and with so many current homeowners trapped by underwater mortgages, the universe of buyers is small, giving someone in the market for a home considerable leverage. The hold up, I think, is the perception (which is also the unfortunate reality) that home prices are still falling. Why buy now if you're
convinced the home will lose 10% of its value during the next year? Why
not wait until the market hits bottom to get in? Convincing folks that the housing market has hit bottom and is about to rebound would help make that a reality.