Housing Policy Could Take Center Stage This Year

Housing in general will continue to be the biggest topic in 2019. Millennials continue to struggle to achieve homeownership and multifamily rents continue to rise, putting pressure on affordability rates. As a result, housing policy is expected to take center stage as the 2020 election heats up this year. This is especially true in California, where affordability has already been a at the forefront of political debate.

“I think that as more and more 2020 democratic hopefuls throw hats into the ring for president, we’ll hear more discussion of housing plans,” Igor Popov, chief economist at Apartment List, tells GlobeSt.com. “For California, a blue state with contentious housing politics, this could mean that local politicians get some political cover to tackle new initiatives.”

The housing market in general will drive this focus on housing policy. This year, Popov expects that millennial homeownership rates will not reach the rate of previous generations, despite a desire to own a home. “I don’t necessarily think the rate will be stagnant because millennials are at the stage right now where most generations enter homeownership at the fastest rate,” he says. “By next year, though, I think millennials will still lag behind where previous generations were at that age. In our national renter survey this year, we found that among millennial renters, 89% wanted to buy a home eventually but only 4% said they plan to do so in the next year.”

The good news: low millennial homeownership will mean continued demand for multifamily product, driving continued rent growth through 2019. However, new multifamily deliveries over the last 12 months and in 2019 could hamper rent growth. “Millennials are renting longer and there will continue to be strong demand in the rental market,” says Popov. “That said, solid multifamily construction over the course of the past few years should temper rent growth in markets that have been allowing sufficient construction.”

Technology companies, both start ups and organic growth, will help to fuel housing construction, demand and rents—since tech companies offer high-paying jobs—but those jobs are largely growing in markets with existing infrastructure to support growth, where pricing is already high. “I think that existing tech hubs, by which I mean cities with a thriving technology center, will grow, but as Amazon HQ2 showed, companies don’t seem to be willing to move to places with little existing infrastructure,” adds Popov.

These will be interesting issues to watch over the year, as housing will continue to be a hot topic.