Echo Boomers Want the Freedom of Renting   Tim Smith of the blog Echo Boomers says that the federal government could offer various incentives to spur homeownership and mortgage rates could drop to 1 percent, but such moves would not stop a shift in the housing market among the Millennial generation, or Echo Boomers. He points out that the assets of 90 percent of Echo Boomers are less than $1,500, which is not enough for a down payment. He adds that the U.S. Federal Reserve, politicians, and banks fail to understand that the Millennial generation does not prepare, does not save, and places a higher value on fun. Smith’s research on Echo Boomers has revealed that fewer than 33 percent want to own a house in the future, as most value freedom over...

Renting Gets Glamorous     A study by the Federal Reserve of Boston’s Center for Behavioral Economics, released in October, says that the number of young people who believe owning a house is better than renting has dropped over the last three years as the economy stalled. In recent years, experts say that renting has gained respectability among young professionals, with “The Great Reset” author and futurist Richard Florida noting, “Multifamily is the only game in town.” Cultural changes are driving the shift toward renting, with people marrying later and placing more value on travel, clothes, and other items, according to Dallas developer Lucy Crow Billingsly, daughter of real estate tycoon Trammel Crow. Billingsly’s...

Children of the ‘Ownership Society’ Prefer Renting (Not Just Housing)   Millenials (18 to 34-year-olds) appear to be more interested in renting than their parents were, as a recent survey indicates that this group is more interested in sharing. A recent Zipcar survey also asked respondents about their willingness to participate in other sharing programs. Some have called this a “collaborative consumptive economy” in which children who grew up in an ownership society now would rather rent a lot of things instead. The demographic and generational shifts to urbanism indicate that people are more interested in sharing than in personal ownership, particularly with a move away from homeownership. Some observers believe that this could make...

The Anxiety of the Forever Renter: Attracting Long-Term Would-Be Renters   Flexibility, mobility, and adaptability are the most important values in today’s society, which is one of the reasons that homeownership is on the decline, according to economists. This is increasingly important in an economy that places renewed emphasis on the ability to relocate for professional opportunities. In this thought provoking essay, this self-declared nomadic author discusses why even though she knows renting might be the right decision for her family, she still wants to own. Among the items she notes are being able to customize her living space and being able to have a pet. Two leading academics have floated the idea that we need some kind of hybrid...

Construction and Rent Rise in Apartment Housing Boom   With falling vacancy rates and demand on the rise, developers are looking to the apartment market to break ground on new buildings. “Construction cranes are coming back on the scene after a stay in storage,” said Reis Senior Economist Ryan Severino. AvalonBay Communities has $1billion in new developments under way, breaking ground on four communities in the third quarter alone. Firm President Timothy Naughton says that there is about $3 billion in the development pipeline for the next two to three years, and $600 million in developments will start in the fourth quarter. UDR has about 2,500 units under development, worth $751million, and the firm is seeking more sites to buy. Rental housing...

Rental Housing Can Bolster Economic Recovery   The housing market still looks grim, but the rental side hints at recovery. Housing investments have dropped from 56 percent in the early 1980s to just 6.3 percent, and house prices have fallen 30 percent from their peak. Nearly 10 million borrowers are delinquent on their mortgages and nearly 25 percent of all mortgage borrowers owe more than their house is worth. The oversupply of housing is compounded by the fact that the rate of new household formation in the U.S. is well below normal, primarily because more young people are staying in their parents’ houses. An economic recovery would encourage the 1.5 million “doubled up” young adults to leave home, and that will favor the rental...

CNBC: Renting Is Good for the Economy   Equity Strategist Peter Boockvar says that there is a new housing market reality in which the homeownership will return to its long-term trend of 65.5 percent, down from a high of 69 percent. Homeownership is likely to dip even lower than the long-term trend as more people rent rather than own. He indicates that the American Dream may no longer be solely focused on owning a house, but the pursuit of life, liberty, and happiness. He says that renting provides dynamism to the economy because it offers flexibility. The economy will not really recover until house prices rebound because foreclosures are the nooses around the necks of banks, he warns. However, having more renters is a good thing because they can move to where...

Mortgage-Interest Deduction Is Ineffectual and Costly   Tax reform is on the agenda as the federal government looks to close deficits and reduce spending, and two previous fiscal commissions of two different presidents have proposed eliminating the mortgage­ interest tax deduction. Additionally, more research from the London School of Economics and the Brookings Institution has pointed to the ineffective nature of the deduction in boosting homeownership. Moreover, a recent Bloomberg Poll found that most Americans would consider ending the mortgage­ interest tax deduction and other tax deductions in exchange for lower tax rates. Only 25 percent of Americans include mortgage interest on taxes, given that renters and homeowners without mortgages have no...

Younger Generation ‘Freaked Out’ by Housing Market Crash   Economists at the Federal Reserve Bank of Boston analyzed consumer sentiment data from the Michigan Survey of Consumers and found that age and personal experience play a role in a person’s willingness to purchase a house amid falling prices. Younger respondents to the Michigan survey “are relatively less confident about homeownership after larger declines,” which means they may be hesitant to make house purchases over the long term. “In terms of the striking age differential, one possibility is that relatively young respondents were indeed more malleable, and hence they internalized the sharp drop as a regime change,” according to Boston Fed Economists Anat...

Mortgage-Interest Deduction Is Ineffectual and Costly   Tax reform is on the agenda as the federal government looks to close deficits and reduce spending, and two previous fiscal commissions of two different presidents have proposed eliminating the mortgage­ interest tax deduction. Additionally, more research from the London School of Economics and the Brookings Institution has pointed to the ineffective nature of the deduction in boosting homeownership. Moreover, a recent Bloomberg Poll found that most Americans would consider ending the mortgage­ interest tax deduction and other tax deductions in exchange for lower tax rates. Only 25 percent of Americans include mortgage interest on taxes, given that renters and homeowners without mortgages have no...