“Are we ceasing to be a nation of homeowners and becoming a nation of home renters?” asked Richard Green, the U.S. Department of Housing and Urban Development’s senior adviser for housing finance, at this week’s Real Estate Economics Symposium held in San Francisco.
Due to issues such as housing affordability and access to credit, there are four million more households renting than the industry should expect, he said.
And declining marriage rates among young people is certainly not helping homeownership in America, said Green, who is also the director of the University of Southern California Lusk Center for Real Estate.
“What we see, particularly among people without college degrees, is that the decline is even more dramatic than it is for the population as a whole,” said Green.
“Married couples are 22 percent more likely to be homeowners than single people are,” he added.
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It makes sense for singles to rent
“It makes sense for singles to be renters — on two dimensions,” he said. “If you are single and want to meet that special someone, you might decide: ‘If things don’t work in this town, I am going to move to another town.’”
And in that case, you don’t want all the fixed costs associated with owner-occupied housing, he added.
“Meanwhile, from a property management standpoint, when you are a married couple there is a division of labor so that when you need the plumber to come do something, between one or two of you, the chance of matching your time with the plumber’s time is a little better. But when you are all by yourself, it’s real easy to send for the landlord.”
‘Important earthquake’
Green pointed out another “important earthquake” happening — women are finishing school at a higher rate than men are. That is, the share of young adult women with college degrees is 8 percent higher than men with a college degree.
“You go back 50 years and that relationship is reversed,” said Green.
The Lusk Center director and some of his students are looking into why young women are holding back from marriage.
He has a hypothesis: “They want someone economically useful in their life, and that means that if there’s a difference in education levels between them and a spouse, their propensity to marry is going to fall,” he said.
