Is renting a an apartment the new American dream? A new report projects that even after the housing crash is a distant memory, homeownership rates in America will continue to decline.
The report estimates that between 2010 and 2030, the majority (59%) of the 22 million new households will rent, while just 41% will buy.
But even the economic recovery won’t reverse that trend. Here are six reasons:
- Wages. Real wages have declined among adults ages 25 to 34 since 1996. “Even for young adults with good jobs, low vacancy rates and high rents make it more difficult to save,” the report says.
- Student loan debt. Total outstanding debt was about $300 billion in 2003; now it is over $1.3 trillion. Long-term debt makes additional long-term debt less appealing.
- Delayed household formation. Both women and men are waiting four years longer before marriage than in 1980. This means that homeownership is apt to occur later. At a result, people will spend less of their lives as homeowners, placing a drag on the homeownership rate.
- Lingering effects of the recession. Roughly 7.5 million Americans lost their homes during the recession; most will have a hard time buying a new one, dragging down the homeownership rate.
- They’re not that into home buying. More Americans are consciously choosing to rent a two bedroom apartment in West Columbia, SC over buying a home.
- Higher borrowing standards. The report says that lenders are still “historically tight,” particularly among borrowers with lower credit scores.