My Mortgage Blog

I remember, back in my awkward youth, talking to a British girl about music and mentioning a relatively new group called The Beatles.

"Oh, they're passing now", the girl, whose American friends called her a Brit Bird, proclaimed.

"They are?" I asked, dubiously.

She nodded. The big thing now is a band called the Rolling Stones.

The music of both bands, of course, is still very much with us, as is the inclination to globalize trends into and out of existence, as demonstrated by the British girl I spoke with. And we’ve been seeing that inclination in spades in real estate throughout what we, with little evidence, have chosen to call a recovery.

Do you remember, for example, how we saw a big surge in demand for rental units apartments, single-family homes with lines forming outside of open houses and potential renters who were ready to bid up the rents if they could secure a unit. And what did a group of experts say? They declared that Americans were no longer motivated by home ownership. We were, it seemed, on our way to becoming a nation primarily made up of renters.

Our living habits were changing, it seemed. We wanted to be lighter on our feet, to be able to move often, to avoid being tied down. Or, something of that sort.

Then, as more people could qualify for purchase-money mortgages, it became clear that a lot of potential homebuyers were waiting to buy, not to rent. Indeed, nothing had really changed. The American Dream continued to involve homeownership for most young Americans.

We were told and I confess that I bought into this theory and wrote about it and its likely implications many times in recent years.  We were told that many buyers, particularly first-timers and Baby Boomers (who are now busily becoming retirees) no longer wanted large homes. The McMansion was passing, apparently.

But all of the polls done since those proclamations were made have told us that young buyers generally want the largest homes they can afford. And another one bites the dust and another expert theory, gone.

There is, in any case, still another recent theory that needs to be received with a massive grain of salt. It goes like this.

For some reason, the unemployment rate for Millenials who are Americans of about 18 to 31 years of age is remarkably high. And an article in Entrepreneur magazine says, Thirty-six percent of Millennials--otherwise known as Generation Y, which includes those born in the early 1980s to the early 2000s--were living with mom and dad last year, according to a report by Pew Research Center. Those 21.6 million people represent the highest share of young adults living at home in at least 40 years.

The dismaying data surrounding the Millenials has caused some amateur experts to conclude that this is a lazy, ineffective generation. Nonsense. As an analyst from Moodys wrote after some sober reflection, while today it may sometimes see that the American Dream will be closed to an entire generation, the fate of the Millennial marks only the latest seemingly permanent condition facing the homebuilding industry, where all things tend instead to move in cycles. The malaise affecting the world’s strongest economy will not last forever.

When these Millenials can afford to buy guess what, they will! And the whole market-has-changed-forever theory will pass into the dustbin of history. I believe you can count on that.