Those born in the 1970s have fallen from having a 4 percent higher than normal homeownership rate in 2004 to a 7 percent lower than normal homeownership rate today, according to a report from John Burns, CEO of John Burns Real Estate Consulting.
Burns states that the housing crisis hit those home buyers born in the 1970’s harder than any other generation. Burns shares that this generation should be referred to as the Foreclosure Generation. In 2004, those born in the 1970s were 25–34 years old, forming families, and ready to buy their first home at the same time that mortgage credit was flowing freely according to Burns. That year, he states that approximately 50 percent of this generation owned their home and this percentage was 5 percent higher than the average homeownership rate since 1981 as well as 11 percent higher than the homeownership rate of today’s 25–34-year-olds.
Burns shares though that as of 2014, this generation is 35–44 years old, and they have a 59 percent homeownership rate. He shares that this percentage is 7 percent below the norm for that age group. He also reports that it is also the lowest rate for 35–44-year-olds since the data became reliable in the early 1980s.
The report says that a 7 percent lower-than-normal homeownership rate at age 35–44 has huge economic and societal implications. Burns says that the same rings true for a 6 percent lower-than-normal homeownership rate at age 25–34. Burns asks the question then, “will home buying activity per adult remain lower than usual?” and “what impact will this have on the economy, particularly for all of those businesses that rely on homeownership and home transactions to drive growth?”
Burns discusses this further in the book Big Shifts Ahead: Demographic Clarity for Businesses, co-authored by Chris Porter and available for preorder. Burns and Porter in the book do their best to project the homeownership rate for each generation by 2025, assuming the economic, mortgage underwriting, and societal shifts that they deem to be most likely. They conclude that there will be an overall 60.8 percent homeownership rate in 2025 which would represent the lowest rate since the mid-1950s. They also state therein lies the opportunity: marketing and selling to those 15.9 million new homeowners, only 2.8 million of whom will come from the Foreclosure Generation.