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March 2024 » thefivestar.com 59 March 2024 T H E P O I N T home being built that meets the profit cri- teria of a builder. So, affordability impacts the builder as well. Palim: The other factor I would like add is that news has not been all negative for first-time home buyers. The homeown- ership rate may have dropped off a little bit, but if you look back over the last few years, the overall homeownership rate has risen to around 65%, which if you look over the last few decades, it's not a shabby place to be. Q: Just to piggyback on that topic a bit, with most of these first-time buyers as converted renters, do you see any fluctuation in the rental market, or will the rental rate nationwide remain high? Palim: There is sort of an extra dimension to that. While multifamily rent growth may have slowed last year, and probably went slightly negative in the fourth quar- ter, single-family rent growth remained positive. We do think that with a signif- icant number of new multifamily units coming online, it may have a dampening effect on rents for at least another year. But, you can have more first-time buyers and still have good occupancy and rent increases, as long as you have strong wage growth because then you have household formation. It does not need to be a zero-sum game between multifamily economics and a healthy first-time home buyer market. Duncan: The basic underlying demo- graphics are strong as well. The millenni- als still have a ways to run, both on rents and on owned homes. I think the average age of a first-time home buyer has gone up a bit due to the affordability issue … I think it is around 36-years of age. But you still have almost a decade of strong demo- graphics behind the current path. Q: Do you see an impact on migration patterns or where people are moving based upon weather events nationwide? Are people's migration decisions becoming more heavily swayed by climate change? Duncan: That question involves two factors: climate change is one, and afford- ability is the other. Fifteen years ago, if you went to Boise, Idaho, and had a lot of land available to build a house that you wanted at a fairly low cost, which is simply not the case today. Many people who had equity in California, and wanted to go to a friend- lier business environment, may have made the move to Boise, and now Boise is huge. The same story applies to areas in Texas, Florida, and Tennessee where you saw an economic migration. Palim: The way I think of it at least, is that in the short run, in order to pay your mortgage or your rent, you need a job. So people move to where the job growth is. If you look at migration, people go to where the job growth is. Over the past decade, this has meant that there has been more movement into areas that are prone to flooding, and prone to fire and wildfire. Over time, you will have to see what happens to the loca- tion of jobs and the relative cost of living in those areas. Does that all balance over time change to where you begin to see jobs migrating away? That is a possibility as well. We don't know yet, but in the short run, the pattern has been people move to where the employment centers are, and where jobs are growing. Q: Would you attribute part of these migration moves to pandemic-related reasons, work from home opportunities, and things of that nature? Palim: Part of that is the issue, but the other thing is the simple cost of doing business, taxes, the cost of housing, and basic competitiveness across different metros and states. Q: Any final comments on the state of housing in 2024 and beyond? Duncan: Our theme for this year is "Housing seeks balance amid economic uncertainty." Some of the things we have been talking about are not in alignment with the traditional rules of thumb that people think of in the real estate space. We specifically did not use the word "normal," because we don't think in the post-pandemic period, it's certain exactly what "normal" is going to be. "We found that for those with a mortgage, 20% of those polled revealed that the top reason they are staying in their house longer is the rate on their mortgage." —Mark Palim, Deputy Chief Economist, Fannie Mae