Traditionally we have been a country of home owners with about two-thirds of households owning rather than renting, says host Mary Walden. But I understand this might be changing. “What’s happening?” she asks her husband, N.C. State University economist Mike Walden.
Mike Walden: Well, we saw a peak in the home ownership rate, Mary, right before the recession. I think that reflected the fact the housing market was booming. More people wanted to own a home, because they thought it was a great investment. Of course we did have a housing crash, and we had the great recession. Now that, of course, brought about tighter credit; that reversed the notion that people should buy a home to make a lot of money. And we’ve had a very slow economic recovery: We’ve had very weak wage gains, and we’ve had very slow job gains. On top of that, you add the fact that many young people — who often really were the steam behind home buying – are staying in school longer. They’re delaying having families, and I think a lot of them want simpler living conditions. All this wrapped together means that rather than new construction being only about 10 to 20 percent apartments, new construction now is accounted as about a third being apartments. That is, we’ve had a boom in construction of apartments. Now the big question that many in the housing market, particularly those that invest in the housing market, are asking is, is this a permanent shift? Are we going to go from only 20 percent of new construction being apartments to a third? And I think we’re going to have to wait to see if we do get an improvement in economic conditions, if we do get the ability of more people to make a down payment and buy a home. Then we’ll probably get a shift back to the traditional level of apartment construction.