The continued increase in the number of single-person households will drive up homeownership rates in the next five years despite a parallel decline in the traditional "Ozzie and Harriet" model, predicts a top economist with the Federal Home Loan Mortgage Corp.
"Singles are no longer just the young and the old," said Ann Schnare, vice president for Housing Economics for the Federal Home Loan Mortgage Corp. "You might think a decline in married with children [households] is bad for homeownership rates, but that's not true."
The shift in family structure, with singles making up 37 percent of the population by the end of the decade, will actually create 14 percent more households overall, said Ms. Schnare, outlining key demographic trends that will shape housing in the 1990s.
Married couples with children, who accounted for 40 percent of households in 1970, will make up only 24 percent by the year 2000.
The Freddie Mac market outlook, released last week in $l Washington, D.C., also pegged higher income as well as the growth and aging of the U.S. population as factors driving homeownership rates. Freddie Mac based its forecast on U.S. Census Bureau data.
Over the next 15 years, the U.S. population is expected to grow roughly 15 percent. With that will come a major increase in the number of people between the ages of 45 and 59, who generally are at the peak of their earning and saving years.
At the same time, the number of households headed by those between the ages of 25 and 39 -- typically first-time buyers in their peak borrowing years -- will decline, she said.
Those trends will boost homeownership by at least 2 percentage points by 2000, Freddie Mac projects. Currently, 64 percent of households in the U.S. own homes.
That percentage could rise, Ms. Schnare said, depending on the number of immigrants to the United States in the next five years and on whether the minority population grows as projected -- by 60 percent for Asians and 38 percent for Hispanics.
She noted that immigrants and minorities would likely become a major source of new homeowners because they are relatively younger and likely to have growing families. Minorities, who currently have lower homeownership rates than non-minorities, will make up an increasing share of the nation's homeowners, she projected.
"The wild card is immigration," agreed Robert Van Order, chief economist for Freddie Mac. "There is uncertainty because we don't know how long it will take people to become homeowners."
Increases in homeownership won't lead to a huge expansion in overall mortgage debt, Ms. Schnare said. She predicted mortgage debt would rise by 6 percent to 9 percent, reflecting growth of income.
Because 15-year mortgages have been prevalent among borrowers in the 40-to-60 age range, the company expects the aging population to produce a permanent rise in 15-year, fixed-rate mortgages and a decline in in 30-year, fixed-rate mortgages.
"As baby boomers age, they are less likely to take on more mortgage debt and are more interested in reducing their existing mortgage debts," she said. "We are already seeing this in our mortgage purchases."
Ms. Schnare also projected a more moderate increase in the price of housing than in the 1970s and 1980s.
Housing prices should increase by about 1 to 2 percentage points above inflation, she said.
Freddie Mac, a government-sponsored, publicly-traded corporation, has helped finance one in six U.S. homes.