It can be difficult to predict the future of the housing market. If it were easy, the real estate industry may not be in the shape it is right now. However, according to a recent panel at an expo held by the National Association of Realtors, one certain generation may hold the key to housing's future.
This panel was called "Shifting Demographics and Housing Choice: A Whole New World" and outlined what to expect from the housing market during the next 20 years. Specifically, the panelists determined that echo boomers - those currently between the ages of 17 and 31 - will be the biggest players. Since there are currently an estimated 62 million people who fall into this age group, in the future, this demographic should have the most buying power in the economy.
"Demography is destiny," said NAR chief economist Lawrence Yun. "In that vein, demographics can provide very useful insights into the future of housing and homeownership, and the results of these reports indicate that certain generational shifts will have a significant impact on the real estate industry over the next two decades."
One in three homes bought by echo boomers last year
Meanwhile, real estate records show that buyers in the age group accounted for roughly 31 percent of all home purchases in 2011, and with affordability currently at an all-time high, this share is only expected to increase in the future. However, with rising levels of debt, these prospective borrowers could find difficulty making the transition to homeownership in the future.
"Echo boomers represent a long-term opportunity for a housing market recovery, but they are struggling in the current economic crisis," said NAR public policy and homeownership studies manager Selma Hepp. "Consequently, demand for rental housing is likely to climb in the near-term."
Housing affordability high
However, this does not deter the fact that it is current more affordable to purchase a home than rent one in most housing markets. According to a recent Housing Affordability Index from the National Association of Home Builders, 77.5 percent of the homes bought during the first quarter were affordable to families making the median household income of $65,000. This is the highest this rate has ever been and broke the previous record set at the end of 2011 at 75.9 percent.