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Zillow Report: How Generational, Social and Racial Gaps Have Impacted US Housing


Zillow recently released a study“Why and How U.S. Racial, Social and Generational Gaps in Opportunity Matter to Housing” at the Zillow Economic Forum in Washington DC in January 2017. Key findings:

Generational Changes

Today’s home renters generally rent an apartment or home for more than three years longer than the generation before.

First time homebuyers in 2010 -2013 were renters for six years on average before buying a home. By contrast, first time buyers of homes rented for only 4.6 years. Translation: this is good for landlords as more people rent for more months before becoming buyers.

From the report: “Today’s first-time home buyers are significantly different than first-time buyers from earlier generations, likely a result of shifting generational preferences, a changed job market and mounting affordability challenges. Today’s first-time buyer is more than three years older and typically rents longer before making the jump into homeownership.”

Socio-Economic Gaps

Renters are now spending a greater percentage of their income on rent than the previous generation.” Nationwide, a renter making the U.S. median income and looking to rent the median home,” said Zillow, “should currently expect to spend 29% of their income on rent, compared to 26% historically.”

Having a collage degree has helped renters become homeowners, of course. The report noted “Having a college degree is strongly correlated with higher incomes and increased rates of homeownership. In 2016, the median income for home buyers was $87,500, and three in four had a college degree.”

In comparison, the median renter income in 2016 was just $37,500, and only half had a college degree.

Racial Gaps

Zillow’s report noted “Minority homeowners were harder hit by negative equity during the Great Recession.” At the end of 2016, “Black homeowners are more than twice as likely as white homeowners to be in negative equity, which increases their odds of falling into foreclosure.”

Negative Equity By Home Value:

Negative equity “underwater” homes were much more likely to be lesser expensive starter homes. Nationwide, almost 17% of all homes in negative equity at the end of the third quarter of 2016 were from the one-third cohort of starter homes.

In Chicago, 29.2% of all homes in the bottom third of value had negative equity.

By contrast, the middle cohort – homes in the middle of the price spectrum –accounted for only 9.5% of negative equity homes (15.4% in Chicago). Just 6.8% of homes in the top third of value in the US were similarly upside down (8.7% in Chicago.).

For the full Zillow report, please click here.

Consider investing in a professionally managed portfolio of single-family homes? Please contact Harold Willig at 917-209-4452 or harold.willig@springviewinvestments.com

Harold Willig is the Manager of SpringView Investment Management, LLC, which he founded in 2012. Mr. Willig also served as HFZ Capital Group’s Chief Financial Officer, and was responsible for the oversight of HFZ's Finance and Accounting team. He has over 16 years of finance and accounting experience. Mr. Willig also ran a consulting practice and provided valuation, analysis, and transactional support services to multi-billion dollar real estate companies. Previously, Mr. Willig served as the Senior Controller and Vice President of Financial Analysis and then the Chief Financial Officer of the Athena Group, a multifamily development company and fund manager.

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