In a new study, Housing in America: The Next Decade, Urban Land Institute senior resident fellow John McIlwain says the housing market will not return to what it was prior to the downturn but rather that a new normal will take its place.
He expects another 10 percent decrease in residential prices this year, a jump in the number of borrowers abandoning underwater mortgages, and a change in consumer perceptions of homeownership.
The emotional impact on the children and parents and disillusion about the 'joys' of homeownership will be intense; new attitudes to homeownership and the American dream will emerge, McIlwain writes.
He expects home price appreciation to hover around 1 percent or 2 percent per year after the market recovers and the national homeownership rate to drop from 67 percent currently to 62 percent by 2020.
In the coming decade, McIlwain expects the following:
- Older baby boomers to move to urban, mixed-use, mixed-age centers near family instead of retiring to Sun Belt communities;
- Immigrants to snub the suburbs in favor of more close-knit communities;
- Younger boomers to face the challenges of lost home equity and a smaller pool of move-up buyers;
- Generation Y to rent for long periods by choice or because they are paying off student loans or have stagnant incomes.