Trump’s promises may become prolific gains.
US home ownership rates have been falling for 11 years straight; they reached a low level of 63.7% at the end of January 2017, after falling to 62.9% in 2016, which was the lowest after 1965.
It may be safe to say that the attractiveness of buying a home in the US has declined since the flourishing of the liberal immigrant policy under the Obama regime. Mass flooding of foreign nationals, reinforced by the IT industry led to a rise in the number of rental homes. The subprime crisis was not something affable either. The crisis led to two principle market alterations: an erosion of investors’ money, and a decline of homebuyers’ trust in making a purchase. It has taken long to regain this trust. Since then, affordability has been the primary concern, especially for the generation currently entering the market, as salary increments always chase housing rate increments. In addition, the US’s social structure of declining nuclear families, and rise in singles living alone or pooling with friends, contribute to the decline. Rise in single immigrants living alone, their career uncertainty, and they being forced to move around to find appropriate careers, keeps them in rented homes. Marriage rates are equally declining, with the first marriage age for women rising from 20 to 26 years, and from 23 to 29 years for men. Late marriages, too, contribute towards a demotivation for buying a house and inviting financial responsibility.
During the housing boom between 1995 and 2004, there was a significant increase in the number of home buyers, most of whom met their sad fate in the 2008 financial crisis. Many even lost their lifetime savings. The financial crisis was perhaps the worst demotivator. Growing mortgage rates, undermined home buyers’ confidence, and resultant cautious investments in real estate and housing, has been the general approach. Demographic differences have also played a crucial role. Many Asian immigrants, who see the US only as periodic instrument for amassing wealth, tend to avoid home purchases in the US, with the desire to return to their home countries to be with their large families. Only some prefer to settle down permanently in the US.
Trump’s attack on the liberal immigrant policy is set to restrict mass influx for the coming years. It will also affect the home ownership ratio of immigrants who, though able to afford, would be restricted from the market. Trump’s presidency, though celebrated by the right wing, has also brought in multiple uncertainties that add to the elongation of indecisiveness in buying a home. Although mortgage rates are attractive in the current market, securing financing for a home purchase has become excruciating. His promise of reduction in tax rates, exemptions to property buyers, are sweeteners yet to be realised by genuine home purchasers. The market must be fixed before home ownership rates rise, else barriers and confusion in home buying shall remain. Home buying education is naturally in demand here, as uncertainty and confusion rules all mortgage decisions. Unless the market sentiment improves, home ownership is to stay sluggish. Apparently, when the sector is seen as an economy stimulator, the efforts of provisioning its rise shall become a priority.