FACULTY SPOTLIGHT: AN INTERVIEW WITH DR. SEPIDEH MODREK
By Sasha Johnson-Freyd | October 3, 2016
The Sightlines project shows that the homeownership rate in recent years is much lower than it was in 2000, especially for people under age 45. While the housing market boom and bust in the 2000s may be one reason for the decline, do you think there could be some other socioeconomic transformation in the US that has contributed to it as well (e.g., people getting married later)?
Absolutely. The timing of marriage and childbearing are strongly related to homeownership and these life events are highly interrelated. As younger cohorts delay or forego marriage, these cultural and sociodemographic changes are also likely to have an effect on homeownership. Another important change is the level of debt that younger people have. While there is some preliminary analysis of the NLSY data suggesting that college debt does not affect homeownership rates,[ref]1[/ref]the jury is still out on this question.
On the reverse of the first question, is it possible that the housing market is affecting people’s decisions about life course? For example, are people postponing marriage until they save enough for a house?
The trend to delayed marriage and more cohabitation predates the housing market fluctuations of the early 2000. So while housing market volatility may affect expectations of homeownership in the short run, this is unlikely to the main culprit. [2. http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w13-1_belsky_0.pdf]
Homeownership is generally considered desirable in the US, probably because many people still view owning a house the ultimate proof of the American Dream. However, if we look around the world, homeownership rates in many developed countries (like Germany and Switzerland) are significantly lower than that in the US. Do you have any thoughts on the future of homeownership in the US? Has there been any notable change in attitude among people, especially among the Millennials, on the necessity of buying a home?
Attitudes are likely to change with circumstance. To really get at this issue we would need to know the expectations of gen Xers in their 20s about homeownership and then their realized home ownership by age 45. We would need similar data on the Millennials. Right now, we don’t know if the Millennials’ lower expectations of homeownership are a function of their age, the economy when they entered the labor market, urbanization of jobs, their expectations about marriage or a deeper shift away from seeing homeownership as a life goal.
It is hard to compare the US and other countries because norms, social structures, and the cost of homeownership is so different in Europe (ie Germany and Switzerland) than in the US.