Wealth inequality is set to be a key presidential campaign issue in 2016.
But a new report from a national real estate trade group shows the next president might not be able to do much on the issue.
That’s partly because a notable contributor to inequity is a dwindling rate of homeownership, according to the National Association of Realtors. And Las Vegas is suffering more than other markets, the group said.
Renters in cities with declining homeownership rates sat out the market at a time when home values have risen and incomes have stayed flat, the association said. Rising home values have given a $5 trillion boost in wealth for homeowners nationwide in the last five years.
“Homeownership plays a pivotal role in the U.S. economy and has historically been one of the primary sources of wealth accumulation for middle class families,” said Lawrence Yun, the association’s chief economist. “Unfortunately, due to an underperforming labor market, insufficient housing supply and overly stringent underwriting standards since the recession, homeownership has plunged to a rate not seen in over two decades. As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen.”
Growing wealth gaps are especially pronounced in markets that had big gains in median home prices in recent years. In Las Vegas, home prices surged by 25 percent to 30 percent in 2013 and 2014. Gains have stabilized at 8 percent to 10 percent year over year in recent months.
But Las Vegas also has a below-average homeownership rate. February numbers from the Census Bureau showed a 2014 ownership rate of 53.2 percent — the nation’s fourth-lowest. The national rate hit a 20-year-low of 64.5 percent.
Combine the rising prices and the low ownership level, and it’s no surprise that Las Vegas landed among the Realtors’ group’s top five markets for unequal wealth distribution. Other cities in the top five were Los Angeles, New York, San Diego and Fresno, Calif.
Las Vegas and other cities highly ranked for inequality aren’t alone, though: The association said 93 out of 100 metro areas it reviewed showed rising inequality spurred by dropping ownership rates and rising prices.
“The decline in homeownership has serious implications for our economy and is currently leading to a more unequal America,” Yun said.
Making mortgages easier to get for creditworthy buyers and building more entry-level new homes would help, he said.
Impacts of sharing
Interested in learning more about how the “sharing economy” might affect commercial real estate development?
Then NAIOP, the Commercial Real Estate Development Association, has a new white paper and seminar for you.
The trade group commissioned John Madden, a sustainability expert at the University of British Columbia, to study the trend and lead a June 16 online class on what it means for the real estate industry.
The sharing economy, in which people split the use of cars, tools, bikes, and even kitchen and common space, is making itself felt particularly in the multifamily and office sectors, Madden found. Think rooftop gardens and coworking centers. Other examples include ride-sharing services such as Uber, bike-sharing programs such as Citi Bike, and short-term accommodations platforms including Airbnb.
“Any developer starting a new project today simply has to factor this phenomenon into their planning, because the demand for these features will continue to grow,” NAIOP President and CEO Thomas Bisacquino said.
Key drivers of the sharing economy are the Internet and mobile access to it; declining real incomes; belief in the commons; and trust.
Companies are increasingly looking for ways to provide access to goods and services through networks of people connected online or through mobile apps, Madden’s paper said. Sharing systems let people use excess capacity while slashing ownership burdens such as storage, maintenance and operating costs.
“In some cases, the goal is to make better use of fixed assets that traditionally have been used only for certain periods of the day,” Madden said.
“The sharing economy makes better use of idle capacity by matching people with spare space. Many forms of shared commercial space use have emerged, including various types of shared office spaces and creative spaces.”
To read the white paper, visit: http://www.naiop.org/en/Research/Our-Research/Reports/Exploring-the-New-Sharing-Economy.aspx
To register for the webinar, visit: http://www.naiop.org/en/About-NAIOP/News/NAIOP-News/2015/Sharing-Economy-Webinar-Invite.aspx
Felix honored for service
A property management executive earned industry honors during a recent trade show.
Rob Felix, regional vice president of Associa, won the Distinguished Service Award from the Community Association Managers International Certification Board. Felix accepted the honor at the Community Associations Institute’s National Conference and Exposition in Las Vegas from April 29 to May 2.
Felix has been in property management for more than 35 years. He’s managed communities, large-scale resorts, started a consulting and reserve-study business, taught around the world for the Community Associations Institute and supported operational branch activity across the western United States.