Owing your own home is a part of the American Dream, right? Well, maybe not anymore. For roughly the last decade – when prices were tabulated over the long-term – buying a home in the US was more than a decent investment. Home prices crashed during the Great Recession and mortgages rates hit record lows. But that trend may have run its course.
That said, home prices have thus far proved rather resilient, despite the pandemic, with one report putting the median monthly cost in the first quarter of 2020 for owning a home at US$1,584 – or 29 percent of the national median income. The median cost for renters was only slightly behind that at US$1,391, representing 25 percent of the national medium income.
Has that stagnation ended? Will the relative stability of housing prices in 2020 extend much further? There are reasons to suspect it has ended and will not be much extended.
National and global instability has been – to put it mildly – disturbed due to the pandemic, and the longer-term reverberations of the many future unknowns are, of course, unpredictable. But there are hints at where things are heading. Stats from May 2020 show a near 15 percent jump among people looking to sell their homes, while the number of apartments and houses for rent remained mostly unchanged. Job insecurity and other financial concerns are among the most probable factors in increasing home sales. More homes for sale and on sale might present a good opportunity for some to grab that dream house at a discount, but for a good majority, buying a new home over the next few years is a risky gamble.
There is little solid evidence that rental prices have reduced much over the last year in major US cities, but it stands to reason that an uptick in homes for sale may not translate to more homes sold. Should this prove to be the case, such a trend would point to more “for sale” properties eventually being put on the market for rent, which would almost certainly drive down rent prices, creating a renter’s market.
“You can’t eat a home at 65,” goes one argument; and younger people do appear to be questioning the logic of taking on the large burdens of a mortgage, responsibility for upkeep, property taxes and other commitments connected to purchasing a home. In short, it comes down to personal needs. If the desire is for investment, buying a home might be the best choice, but if there are not financial aspects involved, renting is likely the better option.
When asked, many millennials and young people noted that renting also allows for greater freedom of movement. Should a work opportunity arise half-way across the county, a renter only needs to give notice as stipulated in a rental contract; a freedom obviously not afforded to home owners.
Technology, robotics, and other “futuristic” factors do point to 2020-2030 being a turbid decade with regard to employment and concerns voiced by younger adults seem more than valid. This signals that moving could become relatively frequent in coming years. The New York Times cited a survey that showed some three percent of 9,600 respondents moved residences since the coronavirus outbreak began.
Moving companies – click here for a host of moving-related info – are already ahead of the curve and have begun adapting by offering more personalized services as competition in the industry increases. This tightening should affect most if not all aspects of moving and renting, from more flexible “rent out just the basement” deals to bargains on moving service packages.
Regional differences are significant and what’s true in Broward County, Florida is the opposite in Montgomery County, Alabama. But instability favors the option that provides more options, and renting certainly comes out on top when it comes to options.
While moving homes in the midst of a pandemic might not sound like an attractive proposition, for many it will become or has become a necessity. The non-profit Brookings Institution noted the current climate is creating “two potentially conflicting forces tugging at real estate markets.” If people believe they are likely to be stuck indoors for long periods, some may opt to move into larger homes; but perhaps more likely is a second scenario: uncertainty and economic contraction could force people to downsize.
In a world upturned by new realities, making solid predictions is foolish. But there appear to be signs that indicate the value of mobility is increasing; and that could point to a shift from “setting down roots” to being able to quickly migrate. No one is taking bets, but moving – and renting – could well define the 2020s.