Don’t pay attention to home ownership level
In new Insight posted at Freddie Mac’s website, however, the mortgage giant says such doom-and-gloom projections ignore potential macroeconomic influences that likely will have a significant impact on the home ownership rate’s future.
As an example, the future of housing finance has yet to be sorted out, Freddie Mac notes. The government-sponsored enterprises (GSEs: Fannie Mae and Freddie Mac) are in their eighth year of conservator-ship, and that will change at some point.
“No one knows when a consensus on the complex issues surrounding housing finance will be reached in Congress, but whatever choices are made will surely influence the future path of home ownership,” the report notes.
Also, millennials may still play catch up. At some point soon they may finally choose to get married, raise families and buy homes – and when that takes place, it could occur at a faster pace than it did with previous generations.
Sean Becketti, Freddie Mac’s chief economist, says projections that home ownership rates will drop also fail to take into account that today’s millennial 35-year-olds may not act the same as today’s baby boomer 55-year-olds.
Further, factors that slow home buying in non-white demographic groups could possibly be overcome, as outlined by Freddie Mac.
Becketti says other studies predicting a drop in the home ownership rate fail to take into consideration such “future macroeconomic disruptions, significant policy changes, or shifts in social attitudes in their calculations.
“In either case, we believe their projections may be overly pessimistic,” Becketti says. “The income and education gaps that are responsible for some of the differences may be narrowed or eliminated as the U.S. becomes a ‘majority minority’ country. And as these kinds of potential home-buyers comprise an increased and greater share of people, it will become increasingly costly to overlook them. Profit-oriented financial institutions are going to be motivated to locate better ways to provide for them.”