One of the most universal signs of success and prosperity is home ownership. It serves both as a source of stable and secure housing and as a long-term investment.
June is National Homeownership Month
National Homeownership Week began in 1995, In 2002, President George W. Bush expanded the period of observance from a week to the entire month of June. National Homeownership Month reinforces the belief that owning a home is one of the steps towards achieving the American dream.
Prior to 1900, most people couldn't afford to build. To stabilize the housing market during the Great Depression, the U.S. government created the Federal Housing Administration in 1934, and the Federal National Mortgage Association (now known as Fannie Mae) in 1938. All these institutions took homeownership to new heights and helped prevent a crash in the housing market. The G.I. Bill of 1944 provided subsidized mortgages for the veterans of World War II. A major milestone in the history of American housing happened when President Lyndon B. Johnson signed the Fair Housing Act of 1968, banning discrimination in housing based on religion, race, gender, and national origin. It came into being only a few days after the assassination of Martin Luther King, Jr.
What does housing look like today?
Let's start with some International numbers…
- Since the outbreak of the pandemic, housing markets all around the world have been booming.
- House price increases have outstripped income increases in recent years.
Romania has the highest homeownership rate in the world at 96.4%
- The country of Singapore is one of the most expensive property markets worldwide.
- As of 2020, Hong Kong was the most expensive city for housing property, with the average residential property costing more than 1.25 million U.S. dollars.
- New York City is the most expensive home market in the United States
In the UK, France, Germany, Sweden, and Switzerland, less than 50% of homes are owner-occupied.
How about the United States? As of 2021.
- The average cost of rent has increased by 61%.
- Homeownership rate stats reveal real estate prices have risen as much as 73% since 2000.
- There are 79.36 million owner-occupied homes in the US. This is lower than the global average but higher than most countries in Western Europe, where the vast majority rents their homes. .
- In the American Midwest, 68.3% of people are homeowners, with the South coming in as a close second with 65.9%. The West has the lowest percentage in all the US with only 59.7%.
- The homeownership rate jumped to 67.9%, the highest since 2008’s 3rd quarter, from 65.3% in the prior quarter according to the Census Bureau.
- Among new homeowners who have been in their home for less than 3 years, the average age is 46 years.
65- to 70-year-olds have the highest homeownership rate among all age groups at 78.6%.
- According to the records for 2021, the homeownership rate for Black Americans rose since 2008, from 44% to 47%.
- The rate for Hispanics increased from 48.9% to 51.4%. This is the highest rate since 1994
- Approximately one third (33%) of all home buyers are first-time buyers.
The median age among homeowners has increased 11.8% since 2003.
- Young people have seen the biggest dip in homeownership over the past decade.
Those last few stats are concerning.
According to estimates from the U.S. Census, by 2019, the millennial generation overtook Baby Boomers as the most populous generation. Numbering over 72 million people, it represented a larger group than Generation X at some 65 million, and had just squeaked past Baby Boomers, who numbered just over 71 million people.
- When it comes to home ownership, millennials trail the older generations.
- Home ownership has been diminishing with each successive generation.
- The ability to make the leap to home ownership is a problem for the vast majority of millennials; 73 % are making the lifestyle choice to rent.
- According to Forbes, seven out of ten millennials say that their living situation is hard or extremely hard to afford.
It is worth considering that household formation, marriage, and child-rearing are all down. The impacts of these trends on future wealth could be long-lasting, as many younger adults will have less time to build housing wealth before they reach their retirement age.
Two challenges to be solved:
- Understanding and solving the barriers that have made accessing homeownership more difficult is vital to avoid the certain long-term consequences of the ownership decline.
- Future developers must address the design needs and wishes of the Millennial generation when planning developments.
The bottom line is that Millennials are the future of the housing market and they’re looking for something different than previous generations of home buyers and are struggling to make it happen.
How about the homes, how will they look in the future?
Trends for new homes include a desire for multifunctional and community spaces, and homes with modern, sustainable elements.
- Location - Living close to work and things to do. You would think that urban areas would accommodate this request more than the suburbs, but this may not be 100% true.
- Relaxing outdoor spaces, including amenities like vegetable gardens, decks and fences.
- Large kitchens are one of the top priorities when buying a home
- Open floor plans where the kitchen, dining and living areas are all connected over a formal dining room.
- More and more buyers are considering their home’s impact on the environment and their overall energy consumption.
- Home automation
- Buyers now want to interact with their homes in the same way they do with their smartphones. Some examples are automated security, heating, cooling and lights.
- Low Maintenance - quick, efficient and long-lasting.
- When it comes to smaller homes and condos, having multifunctional spaces is a must.
Construction technology will play a larger role in future homes.
- 4D Modeling
- Augmented Reality
- Virtual Planning
- Cost control
These advances and more have made construction tech appealing to investors, who have poured at least $3 billion into the sector.