Unlike conventional recessions that depress home buying and owning, the coronavirus slowdown might actually increase the U.S. homeownership rate.
While economic slumps typically depress home buying and owning, the current coronavirus-triggered slowdown could buck conventional wisdom and lead to an increase in the U. S. homeownership rate.
Prior to the onset of the COVID-19 outbreak, which largely shuttered the economy in mid-March, the homeownership rate stood at 65.3% for the first quarter of 2020, marking a 1.1% increase from a year ago. In the last three months of 2019, the rate – at 65.1% – exceeded 65% for the first time since the end of 2013.
“Before this pandemic hit, we had one of the strongest three months of home buying activity across all ages and sectors,” said Lesley Deutch, principal with John Burns Real Estate Consulting. “Really, the industry was about the strongest it has been since the last downturn.”
Because of that, many real estate professionals and analysts believe that the COVID-19 pandemic has created pent-up demand that will flood the market later this year. According to real estate brokerage Redfin
RDFN, home buying demand has already exceeded its post-pandemic level.
“One reason why we might see the homeownership rate increase is that just before the pandemic, there was a historically high appetite for buying homes,” says Ralph McLaughlin, chief economist and senior vice president of analytics at real estate company Haus. “In fact, the number of new homeowners in the U. S. was over 2 million. That’s basically the highest on record in a one year period.”
The viral outbreak has also sharpened the need for new abodes among certain demographics of home shoppers. According to analysis by John Burns Real Estate Consulting, millennials – both first-time home buyers and up-sizing young families – are seeking new homes to replace their currently crammed spaces or escape apartment buildings that preclude social distancing.
