I saw a very interesting article that discussed how the housing crisis has led young people to be less confident in the concept of homeownership. I understand that many people lost their homes during the foreclosure crisis, and it is still a very fragile time for many people who lost equity in their homes…BUT it’s Generation Y who could not afford homes during the 2000-2006 bubble that need to capitalize on the distressed real estate market that we are currently battling through. Slight upticks of positive sentiment, such as increases in building permits, homebuilder sentiments, and price stabilization have occurred in most major markets and have led me to trust my gut instinct that we have hit bottom in the majority of PRIMARY marketplaces. The benefits of homeownership vastly outweigh the known benefits of renting, which is simply the lack of commitment to an asset and the freedom to travel. The numerous write offs which are currently present afford an individual a much stronger financial balance sheet once the overall picture is taken into account (which does not and should not include future appreciation in the equation).
The same bubble notion occurred in commercial real estate where acquisition firms were underwriting long term projected rent growths at 10% annually to compete to purchase projects during the bubble era, which simply was not a sustainable underwriting practice. Now commercial assets are being underwritten at 0% rent growths and the underlying assets are being stabilized through a bottom line cost savings approach. The pre-bubble notion that single-family housing prices could increase year over year by 4-5% was not a sustainable theory. It is HEALTHY that people are buying homes with a long-term investment strategy, rather than the bubble mentality of short-term equity appreciation.
Either way it was a good article and had me wondering why people in the age range from 25-40, who have a stable job and can qualify for the lowest mortgage rates in our countries history…don’t pull the trigger.
Please click on the link below to review the article:
Housing Crisis Made Young People Less Confident In Homeownership: Study