ATLANTA—Homeownership rates have been dropping in the past decade, and not just for millennials. How would a potential uptick—as some are predicting—affect the multifamily market?
GlobeSt.com caught up with Steven DeFrancis, CEO of Cortland Partners, has some insights. He shares with us in part two of this exclusive interview. You can still read parts one and two: Is the Apartment Bubble Real? and Addressing an Under-the-Radar Demographic.
“A rebound in the homeownership rate has long been a popular hope in the marketplace—and not a fact-based prediction or honest assessment of the data,” DeFrancis tells GlobeSt.com. “Without very focused fiscal initiatives aimed at boosting homeownership, a material increase seems unlikely.”
DeFrancis points to a couple of studies to prove his point. Research from the National Multifamily Housing Council and National Apartment Association this past Spring show steady, but generally small, declines in the homeownership rate through 2030.
“Popular opinions are that the worst of homeownership rate declines are behind us,” DeFrancis says. “But homeownership rate are predicted to remain subdued and likely decline a bit further over the coming decade.”
As DeFrancis and many others see it, minor fluctuations in the homeownership rate would be immaterial to the multifamily landscape. Because there are more home-owning Baby Boomers moving to rentership than Millennials moving to homeownership, he says, any uptick would not only be an anomaly, but also be given back in the next couple of periods.
“However, if a material increase in the homeownership rate did occur, it would likely be the result of a radically expansionary fiscal policy that would also serve to boost apartment demand,” he concludes, “which is what happened during the housing bubble.”
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