The future of homeownership is rapidly changing. While a number of blogs claim that it’s all doom and gloom, I like to keep a more positive outlook. Whether you’re a new home buyer or a seasoned real estate investor, you can enjoy the positive trends in homeownership.
Is Homeownership Still a Worthwhile Investment?
Most people think that homeownership is a good investment, even with its potential drawbacks. For example, if your home is located in an area with a major company and for some reason the company closes down, the price of your home might depreciate. Also, some homes take months to sell, making it complicated to liquidate. However, the fact that a home’s value can appreciates over time leads people to believe that homeownership is still a worthwhile investment. According to Money Under 30, some features that can increase your property’s value are location and curb appeal. Also let’s not forget the long standing reality that owning a home is cheaper than renting in most markets. As we learned from Trulia’s recent findings, nationally, it’s over 26 percent cheaper to own a home than renting.
Now Let’s Consider Why the Future of Homeownership is Bright:
First of all, we’re not going to pretend that interest rates and home prices are at ideal levels. In fact, Realtor’s 2019 Housing Forecast claims that the road ahead will be a challenge, especially for new home buyers. Here are some of the key challenges outlined in the forecast:
- Mortgage Rates – By the end of the year rates are predicted to reach 5.5 percent. This breaks down to a monthly increase of about 8 percent in mortgage payments.
- Home Price Growth – Existing home median prices are expected to go up by 2.2 percent in 2019.
Tradeoffs are a Key to Homeownership
While these realities may price some aspiring homeowners out of the market, those who remain in the market for an upgrade or investment property may enjoy the benefits of less competition. Best of all, those with a more flexible budget will enjoy an increase in inventory for mid and upper tier homes.
However, those who fear the higher mortgage rates and entry level prices shouldn’t count themselves out of homeownership so quickly. While we agree with Realtor’s belief that 2019 will pose a challenge in balancing out wants vs. needs, even for house hunters on a budget, homeownership isn’t impossible.
Making tradeoffs will be key and listing your wants vs. needs is a critical first step. This list will help you compromise without sacrificing your core values when it comes to your new home.
Technology and the Road to Homeownership
Plus, when it comes to balancing wants vs. needs, technology is making this a lot easier. Platforms like Zillow are already planning on using AI, specifically neural networks, to give house hunters more data. As a house hunter on a budget, I can tap into this data and make tradeoffs in my housing purchase. The prevalence of publicly available property listings adds a level of buyer empowerment. This is something that the exclusive, traditional MLS doesn’t provide.
Thus, regardless of market conditions, the future of homeownership is bright for those willing to leverage technology and go through the process of balancing wants vs. needs in their housing search.
Single Women Are Leading the Way
Beyond the money, the future of homeownership is bright because it’s no longer a right of passage for only the traditional married couple with kids. Single women are purchasing homes at a higher rate than single men. The real estate market isn’t ignoring this trend. In fact, realtor Jeanie Douthitt launched Smart Woman Buy Homes as a response to this trend in single female homeownersip. The company focuses on helping single women overcome challenges to homeownership.
Co-living as a Housing Alternative
Another trend in homeownership is the rise in co-living. For those who choose co-living, it’s not all about shared costs and affordability. For many, co-living is appealing because of the sense of community. This is especially true in expensive cities like New York City and San Francisco. In these cities, co-living spaces are appealing to single millennials. They can’t yet afford the sky-high housing costs, but still want a place to call their own with a network of like-minded peers.
In these more expensive and sought after cities co-living can disrupt traditional homeownership. The future of homeownership, especially for millennials in these cities, may look more like a highly curated co-living community than a traditional home with a nuclear family. But for smaller cities and suburbs, I predict co-living won’t disrupt traditional homeownership.
Millennials Can Make Homeownership a Reality
We can’t discuss the future of homeownership without looking at the current plight of millennials. Millennials are the largest living generation. It’s no secret that there are hurdles on their path to homeownership. These include coming up with an initial down payment for a home and mounds of student loan debt. However, millennials aren’t that different from previous generations. They still desire to own a home and tie homeownership to the American Dream.
Yes, millennials face challenges, but homeownership doesn’t have to be an endlessly delayed dream. As The Motley Fool states, millennials can make their dreams of homeownership a reality sooner rather than later by adopting monthly savings goals and even investing in side hustles.
Millennials can also move towards home ownership by re-evaluating their expectations. Purchasing a tiny home might be a stepping stone to purchasing a second larger home, or even multiple investment properties.
Thus, the future of homeownership is bright for those willing to make tradeoffs, leverage technology and seek the financial literacy required, especially for first time homebuyers. Most of all, the future of homeownership is bright for those who can see the journey towards home ownership as different from previous generations. Gone are the days when homeownership meant marriage, children and a white picket fence. While those days are gone, the American Dream of homeownership is still alive and potential homeowners are more empowered now than ever before.
Ready for more? Click here for Part 2 of the future of home ownership!