Sarah Paynter, a real estate reporter at Yahoo Finance, The Real Deal, and Newsday, moderated a homeownership demographics-focused panel at Thursday’s NAR Real Estate Forecast Summit: Post-Election Outlook.
Guests on the panel included Rodney Harrell, VP of Family, Home, and Community at AARP; Jessica Lautz, VP of Demographics and Behavioral Insights at NAR; and Richard Fry, Senior Researcher at Pew Research Center.
The panel dug into the data behind homeowning trends for first-time buyers, multigenerational dwellers, millennials, Baby Boomers, various ethnic subsets, and more during a global health crisis.
“The coronavirus is impacting all kinds of decisions for people, across age ranges as this pandemic is making us understand our housing needs in new and different ways,” Harrell said. “We need to reconsider what that new normal is going to be—what that new world is. It’s only natural that that would have some impact on purchases.”
The panel began by discussing how the pandemic is influencing the home-purchasing behavior of millennials and first-time buyers.
One of the main things about the demographic in question, Lautz says, is that parents’ financial contributions to their children’s homebuying efforts have “shrunk considerably,” which could be negatively impacting the millennial generation’s ability to purchase real estate.
“When we look at the data from last year, what we see is about a third of first-time homebuyers actually received downpayment assistance, and this year it shrunk to a quarter, so we think that there could be some family members who aren’t able to contribute that transfer of wealth,” she said. “With home prices rising so steeply, and low inventory, without that assistance … not to mention student debt, they have a lot of hurdles, and without that extra push from mom and dad it’s really hard to enter.”
The moderator said that as a huge generation ages into prime homebuying years, there still is a relatively young population of baby boomers who own a lot of the residential real estate in this country, which could impact competition, prices, and availability in the coming years.
Harrell said that when discussing competition it is important to also focus on types of housing needs.
“We like to talk about livable communities, places that are close to transit, shopping, and the resources that folks need. Not to mention, if you’re thinking about aging you might need a home that has features that support people of any age. Then the supply gets even smaller,” he said. He says the data collected by AARP show that millennials and Boomers want the same things in a home. “But what’s different are the barriers that face different people in different groups.”
The panel went on to address the aging population and multigenerational housing, the experts noted that there is an essentially even split between aging adults who are moving into a family home and young adults returning home.
“I think there’s a there’s a lot of motivations for families [to live together] but certainly I don’t know if the housing stock is going to be able to support that,” Lautz said.
Another topic the panel touched on was the gap between Black and White homeownership.
Lautz says NAR data has shown that the Black and White homeownership gap is a wide as it was when the Fair Housing Act started collecting the data in the 1990s, 73% for White Americans to 42% for Black Americans. (Hispanic and Asian homebuying has increased during the pandemic, panelists pointed out.)
“You know, part of the reason why we should focus on these gaps is that it’s also tied to the wealth gap that exists between the different racial groups. Homeownership is one of the great wealth-building parts of our country,” Harrell said. “So there are certain groups that are missing out. One of my concerns about this post-coronavirus period is that we’re looking at a wave of foreclosures and evictions that will, in particular, hurt African American and Latino communities.”
The younger generation is more diverse, Lautz says, therefore she is optimistic about increasing diversity among first-time homebuyers.
“I do believe that the American dream of homeownership is very strong,” she said. “It’s very much alive from all of the survey data that I’ve seen. If you’re not a homeowner, you want to be one in the future, whether that’s a short-term or a long-term goal. So I think that’s encouraging among all races.”
Slides from the discussion will be accessible December 14 at NAR.realtor.
Correction: An earlier version of this story attributed the following quote to Richard Fry: “The coronavirus is impacting all kinds of decisions for people, across age ranges as this pandemic is making us understand our housing needs in new and different ways. We need to reconsider what that new normal is going to be—what that new world is. It’s only natural that that would have some impact on purchases.” The quote should have been attributed to Rodney Harrell. We apologize for the error.