Renting vs. Homeownership
Renting vs. Homeownership
Historically, the goal towards homeownership has traditionally been among many American ideals. Today, however, data shows the younger generation entering the workforce is beginning to increasingly prefer apartment style living. At the time when previous generations have entered the ‘house-buying’ years, a change-of- heart is now occurring to favor multi-family residence due to a generational imbalance, historical scare, and change in preference. Ultimately this creates both benefits and disadvantages to those involved in commercial and residential real estate.
Generational Imbalance
A key imbalance between two current generational groups has played a pivotal role in the decrease in homeownership. Generational groups are an essential point of analysis because they encumber an age demographic of people born in similar eras on a nationwide basis. As expected, the rate of homeownership increases along with age. For example, although the homeownership rate for the country is 67.2%, the homeownership rate by someone under the age 35 is only 38.9% (Epstein, 2010). As seen in Figure 1 and 2 the three most significant generations in home ownership at the present time are the boomers, busts, and the echo booms. Due to the separation in generational ‘boom’ eras, the size of consecutive age groups in the future will continue to expand and contract.
Figure 1 details the age eras in which the generations are classified. Figure 2 displays the proportion according to The United States Census. The echo boomer generation, which is the largest portion of the population, is now entering the time when they are entering the workforce and consequently the home buying years. This is happening, in addition, to the fact the baby boom and bust generation are naturally diminishing and downsizing due to economical factors. Thus, the market must adjust to the will of the matured echo boomers, resulting in home ownership displacement.
Housing Bust
The
Historically, the goal towards homeownership has traditionally been among many American ideals. Today, however, data shows the younger generation entering the workforce is beginning to increasingly prefer apartment style living. At the time when previous generations have entered the ‘house-buying’ years, a change-of- heart is now occurring to favor multi-family residence due to a generational imbalance, historical scare, and change in preference. Ultimately this creates both benefits and disadvantages to those involved in commercial and residential real estate.
Generational Imbalance
A key imbalance between two current generational groups has played a pivotal role in the decrease in homeownership. Generational groups are an essential point of analysis because they encumber an age demographic of people born in similar eras on a nationwide basis. As expected, the rate of homeownership increases along with age. For example, although the homeownership rate for the country is 67.2%, the homeownership rate by someone under the age 35 is only 38.9% (Epstein, 2010). As seen in Figure 1 and 2 the three most significant generations in home ownership at the present time are the boomers, busts, and the echo booms. Due to the separation in generational ‘boom’ eras, the size of consecutive age groups in the future will continue to expand and contract.
Figure 1 details the age eras in which the generations are classified. Figure 2 displays the proportion according to The United States Census. The echo boomer generation, which is the largest portion of the population, is now entering the time when they are entering the workforce and consequently the home buying years. This is happening, in addition, to the fact the baby boom and bust generation are naturally diminishing and downsizing due to economical factors. Thus, the market must adjust to the will of the matured echo boomers, resulting in home ownership displacement.
Housing Bust
The