Why are inventories of for-sale homes so low in many neighborhoods?
According to the Harvard University Joint Center for Housing Studies, the situation can be blamed on several factors:
- Owners feeling stuck in their homes because they’re underwater (owing more on their mortgages than their home is currently valued);
- The still-high volume of homes in the foreclosure process that are being held off the market;
- The lack of new-home construction;
- Many single-family units that have turned into rentals
JCHS also highlighted one big culprit not often discussed-demographics.
“The ongoing generational shift among American households has slowed sales in the short run and is likely to continue to dampen sales over the next two decades,” according to the JCHS blog.
Over the last decade, members of Generation X – those now in the 30 and 40 year old age group – have replaced the large baby boom generation, and the Gen X population is much smaller. In fact, among the 35- to 39-year-old age group, the population in 2013 was 9.3 percent smaller than it was a decade ago, with 10.4 percent less households.
As such, the home ownership rate has dropped considerably, particularly among 35- to 44-year-olds. Home ownership rates among Gen Xers – particularly those in their 30s and 40s – are most significantly below 20-year historical rates for other similarly aged adults.