1. National housing shortage
The U.S. has a chronic shortage of homes. Coastal states are particularly affected, with California and Washington facing huge challenges. The cause? The demand for housing continues to grow faster than the development of new housing. New reports estimate the nation-wide shortfall at 4 million housing units. Some sources claim the actual figure is closer to double that amount.
Housing Underproduction (2000 to 2015)
2. Homeowners staying put for longer
Because of tight supply and decreasing affordability, existing homeowners who want to move have relatively fewer options from which to choose. So many are simply deciding to stay put for longer.
The average U.S. homeowner now spends 8 to 13 years in their home, depending on which source you believe. What’s clear is that the tenure for homeownership has increased dramatically in recent years.
With too few homes in existence and fewer homeowners deciding to sell, buyers have less inventory to choose from and face increased competition for the homes available on the market.
3. Millennials coming of home-buying age
Nearly 5 million Millennials will reach 30 years of age in 2020. This is historically considered the ‘prime age’ for buying a first home, according to Senior Economist George Ratiu of realtor.com.
Millennial Generation Fast Facts
’81 – late ’90s Hello world!
c.80 million Individuals (largest U.S. generation in history)
72% Say homeownership is a ‘top priority’
$93k Average spent on rent between ages 22 and 30
Sources: Wikipedia, Bank of America, RENTCafe
Millennial homeownership lags behind previous generations (at the same age) by about 8 percentage points. Student loan debt, rising living costs, and evolving preferences around marriage are drivers.
4. Millennials heading West for jobs
Strong labor markets and favorable wage growth are attracting Millennials to Portland, San Francisco, San Jose, and Seattle metros in record numbers, according to a recent survey.
Metros along the west coast are also leading the nation in GDP per capita growth according to recent data released by the Federal government.
Per capita GDP – real growth rates (2013-2018)
Ranked by metro
# 1 San Jose metro (43.8%)
# 2 San Francisco metro (25.8%)
# 3 Seattle metro (16.9%)
# 4 Portland metro (16.2%)
# 5 Los Angeles metro (15.3%)
5. Sky-high rents
Rents are constraining household budgets and making it difficult to save up. Half of U.S. renter households now qualify as “cost-burdened”. One in four renter households spends 50% or more of their total household income on rent.
Rents have continued to rise steadily since the turn of the century at the national level, outpacing incomes.
High rents in many major metro areas are likely to persist despite initiatives to overhaul residential zoning, density, and permitting for new developments.
Co-buying is complicated.
Individual financial contributions / Eligibility for a joint mortgage / Credit implications / Co-borrowing vs. co-signing / Gifts, loans, and shared equity / Ongoing financial obligations / Rights, roles, and responsibilities / Risks & safeguards / Structuring ownership / Tax & accounting / Legal considerations / Exiting the co-ownership arrangement
CoBuy can help.
CoBuy makes it easy to buy & own a home together, intelligently. We work with buyers to navigate the purchase process efficiently and effectively. Best of all, there’s no added cost to use CoBuy.
Considering buying a home with friends, family, or a loved one? We’d love to hear from you. Create an account at CoBuy or drop us a note below for more info.