Younger buyers keep the key

Let’s talk about the formation of households first. I have a simple model (even more suitable before Valentine’s Day). My demographic model of American housing shows that Americans:

• Rent
• Date
• Mate
• To marry
• 3.5 years after the marriage we have children and households with two incomes buy larger houses to live in.

After evaluating today’s census data, everything seems to me. A third of the nation will remain lifelong tenants unless they get married and have a household with double incomes. Millennials have been the largest group of home buyers for more than 10 years. Just like previous generations, when they start forming households, people with a good income tend to buy houses.

However, if house prices had not risen in addition to the mortgage interest rate, we would enter the market more younger home buyers and we would have a slightly higher rate for homeowners than 65.7% of the current 65.7%.

By Census: The percentage of the homeowner of 65.7 percent was almost the same as the rate in the fourth quarter of 2023 (65.7 percent) and not statistically different from the rate in the third quarter of 2024 (65.6 percent).

My economic model for housing started in 2010 and I divorced my work in two different timelines. One was from 2008-2019 and the other was from 2020-2024. Early in the last decade I made a daring and somewhat controversial forecast: The percentage of homeowners would fall to between 62.2%-62.7%. I was 0.2% eliminated and the lowest we received was 62.9% in the second quarter of 2016.

I want to explain the reasoning behind this prediction, because at that time it emphasizes the changing landscape of the homeowner, influenced by various important variables.

Demographic trends shifted

First and foremost, demographic trends appeared dramatically. Our population was too young or old to actively participate in the home buying market, instead to tilt the scale to renting. Moreover, a stunning 10 million plus homeowners struggled with mortgage -like delinquencies. For many, losing their houses meant the transition to the rental market, which further contributes to this shift from homeowner to tenant.

The requirement of the bubble years of the house was untenable

Finally, while we saw an increase in homeowner and purchasing applications during the bubble years of the home years, this level of demand was untenable. The enormous credit and sales tree during the house bubble years simply could not maintain themselves. To keep it short and sweet: the house bubble years have blown up the data. The weaker demography for homeowner and the disappearance of exotic loan options meant that the market could not maintain such high numbers for long.

This was essentially a time of important change, in which the reality of the housing market reformed what the percentage of the homeowner would look like.

How we have grown the homeowner

Before this decade, some experts said that the expectation of ownership was at 62.2% in Bullish and that the rates of the homeowner were intended to lower. But I do not agree with that and in the past decade I have made a controversial phone call, and I said that the percentage of homeowners can return to 66.21%between 2022-2026 at a certain moment.

These were my variables written in 2019, which still last today:

1. The median age for the first home buyers is now 32 and the number of Americans aged 25-31 is huge. Millennials are still the highest percentage of home buyers in America, and they usually start buying from rent home, although the elder now buy their second houses.

2. Boomers stay in their houses longer, so remaining homeowners. Huis duration doubled in America from five to seven years from 1985-2007 to 11-13 years from 2008-2025. This leaves many homeowners in place.

3. The loan profile of buyers during the expansion after 2010 is excellent. When the next recession of the loss of jobs takes place, we will not lose as many homeowners (compared to what happened after the large recession).

As you can see below, these graphs prove that we would not lose homeowners in scale as we did after 2008. Foreclosures and delinquency were a net negative for the homeowner’s data. from 2008-2016.

When the next recession of the loss of jobs takes place, we will see an increase in delinquencies, but nothing like what we saw in 2008.

The trend looks good

This latest report from the homeowner reflects the trends we see and everything is on schedule. The highest percentage of homeowners we recently received was 66% in Q3 of 2023. I do not include the peak in data during the COVID-19 Pandemie, because that period was unreliable for keeping this information.

Since 2020, the drastic rise in house prices and the mortgage interest that 8% approached made it even more challenging for younger buyers to enter the housing market. If house prices and rates had been more stable between 2020 and 2024, we would have already achieved our goal of 66.21%. However, life often forms unexpected challenges. We are still close to our target of 66.21%and I still have two years to achieve this.