Generational Trends in Home Ownership:
An Era of Renters?
Glenn E. CrellinRunstad Center for Real Estate Studies
University of Washington
Realtor® University ForumMay 18, 2012
Acknowledgments
Principal Sponsor of this project Realtor® University Research Center
General Sponsors of WCRER/Runstad Center Research Washington Real Estate Commission Washington Realtors®
Recent Headlines
Homeownership May Be for the Few, not the Many USA Today, March 2011
American Dream, Downsized: Homeownership Not a Given McClatchey, September 2011
Renting Prosperity Wall Street Journal, May 5-6, 2012
Identifying Generations G.I. Generation
Born 1900-1924: Age 87+ Silent Generation
Born 1925-1945: Age 66-86 Baby Boom
Born 1946-1964: Age 47-65 Generation X/Baby Bust
Born 1965-1979: Age 32-46 Generation Y/Millennials/Echo Boom
Born 1980-2000: Age 11-31 Generation Z/Internet Generation
Born 2001-present
Age Distribution of Population
13%
28%
20%
26%
11%
2%
Z/InternetY/MillennialX/BustBoomSilentG.I.
Tenure by Age Group
G.I.
Silent
Boom
X/Bust
Y/Millennial
0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000
Own Rent
Tenure by Age Group
G.I.
Silent
Boom
X/Bust
Y/Millennial
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Own Rent
Household Formation: 1980-present
19801982
19841986
19881990
19921994
19961998
20002002
20042006
20082010
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Homeownership Rate by Age of Householder
1982 1992 2002 20110
10
20
30
40
50
60
70
80
90
<3535-4445-5455-6465+
%
Historical Context
Mankiw and Weil, Regional Science and Urban Economics, 1989 “The entry of the Baby Boom generation into its
house-buying years is found to be the major cause of the increase in real housing prices in the 1970s. Since the Baby Bust generation is now entering its house-buying years, housing demand will grow more slowly in the 1990s than in any time in the past 40 years. If the historical relation between housing demand and housing prices continues into the future, real housing prices will fall substantially over the next two decades.”
Recent Homeownership Rates
19821984
19861988
19901992
19941996
19982000
20022004
20062008
201030
35
40
45
50
55
60
65
70
75
All Under 35
%
Number of Homeowners by Age Group(1,000s)
<25 25-34 35-44 45-54 55-64 65-74 75-84 85+
1960 323.5 4,489.9 6,328.2 9,434.9 4,377.9
1970 548.2 4,817.2 7,337.2 12,584.3 6,129.1
1980 1,085.7 8,681.3 9,148.1 18,689.9 10,767.6
1990 862.2 9,000.4 13,503.0 10,773.9 9,864.1 9,071.9 5,949.3
2000 989.7 8,336.5 15,866.9 15,957.1 11,367.3 9,353.2 6,339.6 1,605.5
2010 869.6 7,547.4 13,255.6 17,804.1 16,502.7 10,834.0 6,789.0 2,383.6
GI Silent Boom X/Bust Y/Millennial
Homeownership Rate by Age Group(Percent)
<25 25-34 35-44 45-54 55-64 65-74 75-84 85+
1960 12.5 46.2 54.5 48.4 46.4
1970 13.8 45.6 66.1 69.9 61.4
1980 18.1 50.2 70.8 46.9 69.3
1990 17.1 45.3 66.2 75.3 79.7 78.8 70.4
2000 17.9 45.6 66.2 74.9 79.8 81.3 77.3 66.1
2010 16.1 42.0 62.3 71.5 77.3 80.2 77.9 66.2
GI Silent Boom X/Bust Y/Millennial
Homeownership Rates by Age Group(Percent)1982 1987 1992 1997 2002 2007 2011
1948-52 57.1 64.1 69.1 74.2 77.8 79.9 79.8
1953-57 38.6 53.5 61.4 69.7 74.9 76.9 77.3
1958-62 19.3 36.4 50.5 62.6 71.7 74.0 74.4
1963-67 16.0 33.6 52.6 65.2 70.4 71.0
1968-72 14.9 35.0 55.0 65.0 66.9
1973-77 17.7 39.0 54.4 59.8
1978-82 23.0 40.6 49.8
1983-87 24.8 34.6
1988+ 22.6
Boom Bust Millennial
WSU Student Survey: When Plan to Purchase Home
10%
48%
24%
7%
7%4%
1-2 yrs3-5 yes6-10 yrs11-15 yrs>15 yrsNever
WSU Survey: Impact of Bubble/Collapse
%Much more likely to purchase 6.9More likely to purchase 34.5No change in likelihood of purchase 13.8Less likely to purchase 13.8Much less likely to purchase 3.4
Conclusion
“Gen Y will absorb an even greater number of owner-occupied and detached housing units. Indeed, if they attain 2020 ownership rates similar to households of the same ages in 2010 (which are much lower than those in 2000), they will absorb nearly 13 million owner-occupied units during the decade, or 2.5 million more than were absorbed by households of the same ages during the 2000s.” Bitter and Krause, 2012