Keep Calm and Don’t Be a Chicken Little
Following the Census Bureau’s 2019 Q2 Homeownership Report release, the Chicken Littles of the world came out in droves! We were, on a daily basis, dispelling rumors that another recession is going to happen by the end of the year. Many interpreted the report as Americans may be stepping back from their belief in homeownership, therefore leading to another recession.
Americans who owned vs. renting their primary residence (a.k.a. homeownership), increased significantly during the housing boom, reaching an all-time high of 69.2% in 2004. *Reminder: The Great Recession began in 2008.
The Census Bureau reported that the second quarter of 2019 ended with a homeownership rate of 64.1%, which is down fractions from the 64.8% rate for the fourth quarter of 2018. This stat is exactly what led the Chicken Littles to question whether the consumer’s belief that homeownership is a major part of the American Dream, is waning or not.
YES! The numbers don’t lie! It IS true that homeownership rate DID fall. However, based upon the national rate over the last 35 years (1984-2019), the current data reflect that the homeownership rate has returned to historical norms. The 64.1% rate is equivalent to the rates in 1984 and 1994.
What Will the Future Bring?
Well, if only we all had a glass ball. And, if only there was a way we could either hibernate during the low points in the market when we saw it in our glass ball! Or better yet, wouldn’t it be nice if we could collectively change the future when we saw a recession on the horizon in our glass balls?!
However, before you don your Chicken Little costume, REMEMBER, a large part of the reason that homeownership slipped is because of a lack of inventory. Even digging even a little deeper, a lack of inventory available for purchase for first-time home buyers has also curbed homeownership for that large, very specific sector. The demand is there, but, the supply simply is not.
Ivy Zelman has recently reported that builders are now increasing the number of homes they’re constructing at the lower-end price points:
“Robust growth in the entry-level price point of late should translate to a reacceleration in homeownership rates moving forward.”
Today, the homeownership rate sits at historic norms. Sure, we will likely see increase in inventory in the upcoming months. This is no surprise or change for those of us in the industry – this is a SEASONAL change that we are accustomed to experiencing.
Don’t let the talking heads convince you to don your Chicken Little suit - there is no reason for concern!
© Debe Maxwell | The Maxwell House Group | RE/MAX Executive | CharlotteBroker@icloud.com | Keep Calm and Don’t Be a Chicken Little - Don’t let fake news impact your home buying – talking heads are not in the trenches – we ARE!