American Dream Of Homeownership & What You Need To Know
Recently, the National Association of Realtors (NAR) has conducted a virtual Economic & Real Estate Summit on December 10, 2020. The summit provided a year-end review and outlook on the post-election real estate market.
The homeownership demographics-focused panel guests were;
- Rodney Harrell, VP of Family, Home, and Community at AARP
- Jessica Lautz, VP of Demographics and Behavioral Insights at NAR
- Richard Fry, Senior Researcher at Pew Research Center
Highlight: Pandemic’s influence on home-purchasing behavior of millennials & first-time buyers.
“The coronavirus is impacting all kinds of decisions for people, across age ranges as this pandemic is making us understand our housing needs in new and different ways. We need to reconsider what that new normal is going to be—what that new world is. It’s only natural that that would have some impact on purchases.”
Richard Fry
Senior Researcher at Pew Research Center
Parent’s Financial Contribution
One of the main things about the demographics in question is the parent’s financial contribution towards their children’s homebuying efforts. Last year, data shows about one-third of first-time home buyers received downpayment assistance from their parents. This year, it shrunk to a quarter.
Therefore, the decrease in parent’s financial contribution could negatively impact the millennial generation’s ability in purchasing real estate.
“We think there could be some family members who aren’t able to contribute that transfer of wealth. With home prices rising so steeply, and low inventory, without that assistance … not to mention student debt, they have a lot of hurdles, and without that extra push from mom and dad it’s really hard to enter.”
Jessica Lautz, VP of Demographics and Behavioral Insights at NAR
The moderator, Sarah Paynter, a real estate reporter at Yahoo Finance, The Real Deal, and Newsday, mentioned some other factors. For example, the impact of competition, prices, and availability in the coming years.
Rodney Harrell stated that when discussing competition, it is important to also focus on types of housing needs.
“We like to talk about livable communities, places that are close to transit, shopping, and the resources that folks need. Above all, if you’re thinking about aging you might need a home that has features supporting people of any age. So, supply gets even smaller,” he said.
AARP data shows that millennials and Boomers want the same things in a home. The only difference is the barriers that possible homebuyers face.
Aging Population and Multigenerational Housing
Experts pointed out that there are almost the same numbers of aging adults who are moving into a family home and young adults returning home.
Lautz believes that there’s a lot of motivation for families to live together. Meanwhile, it is not certain if the housing stock can support such motivation.
African American and Caucasian homeownership
NAR data shows that the African American and Caucasian homeownership gap is as wide as it was back in the 1990s. Homeownership for Caucasian Americans is 73% but only 43% for African Americans.
On the other hand, the panelists did point out that Hispanic and Asian homebuying has increased during the pandemic.
Homeownership is one of the greatest wealth-building opportunities
Furthermore, Harrell added, “Wealth is part of the reason why we should focus on these gaps between different racial groups. The gap proves that certain groups are missing out. In other words, this post-coronavirus period brings a high chance for a wave of foreclosures and evictions. Consequently, will, in particular, hurt African American and Latino communities.“
In conclusion, Lautz shared, “If you’re not a homeowner, you want to be one in the future, whether that’s a short-term or a long-term goal. So, I think that’s encouraging among all races.”
And such goal made the experts believe that the American dream of homeownership is very strong.
