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18 | M R EP O RT FEATURE P icture this: It's 2030. The last of the millennials are reaching their early 30s. In the previous 10 years, millions of first-time homebuyers have purchased homes. Looking back, it has been a big decade for homebuilders, as well. At the beginning of the decade, builders struggled with catering to first- time homebuyers and understand - ing how to meet their unique needs at an affordable price point. The last of the millennial homebuyers will be buying first homes and getting their first mortgages completely virtually, just like many shoppers today are buying groceries on Amazon. In the housing market, there are vast platforms for homebuyers and sellers, allowing them to view properties, chat with owners, make offers and counteroffers, close the mortgage, set move-in dates—all online. The experience of homebuying and selling in the preceding 10 years has been transformed by technology. These buyers are saying goodbye to their single-family rental homes that are professionally managed and owned by large institutional investors. Renting has become a choice, instead of a necessity for some. A wave of renova - tion has also swept the country. Appliances, roofs, and structures of the past decade have been replaced with brand new items. How can this be possible? The answer is simple … 2020. This past year has brought the industry—and the world—many events that no one could have predicted. These events—from a global health crisis, to a recession, to an election—all significantly affected the housing market. However, over the next 10 years, the housing industry must deliver in these areas: access to home - ownership for the new generation through expanded housing supply, a digital homebuying and selling experience that can be done in a few clicks, an institutional single- family rental industry that deliv - ers a superior living condition for renters, and revamped housing stock through renovation. While challenging, they also will bring significant rewards and oppor - tunities for companies, investors, renters, homebuyers, and housing industry employees. A Market Moving Toward Recovery T he COVID-19 pandemic and resulting uncertainty ushered in a recession that significantly af- fected the housing market. Many homeowners were fearful about the stability of their incomes and had to consider what their options were if they could no longer afford their mortgage. In the same way, buyers were fearful about whether they would be able to purchase a home during a recession. However, this recession resulted in a V-shaped rebound, meaning the housing market took a slight dip then made a rapid recovery. Home sales in February, May, and September tell the story at three different points in the pan- demic. At the end of February, the seven-day average number of confirmed COVID-19 cases was under 20. That month, 5.7 million homes were sold in the United States. At the end of May, the first wave of coronavirus peaked, and the seven-day average number of confirmed cases was over 21,000. That month, 3.9 million homes were sold—down over 30% from February. At the end of September, the seven-day aver - age number of confirmed cases was over 43,000, and 6.5 million homes were sold that month—the highest number since 2006. What does this rapid turn - around tell us about the housing market? It tells us that people have more appreciation of the value homes offer once the pandemic hit: in times of crisis, homes are shelter, office, class - room, restaurant, movie theater, gym, convention center, hospital, and more. After the pandemic, it is likely that homes will retain some of the increased functional value they gained during the pan- demic, and that may result in a discrete jump in housing demand and value. This lesson will likely have a significant impact on first-time homebuyers. One of the most telling statistics during the pandemic is the jump in home - ownership rate in the second quarter: it increased by almost four points from a year ago to 67.9%, the highest level in 12 years. The Single-Family Rental Surge A ccording to Pew Research, about 40% of American households rent instead of own. These households either could not afford a home yet or chose rental properties instead of purchasing for mobility reasons. According to the Census Bureau, renters tend to have lower incomes, less wealth, and are younger and more likely to be minorities. Some might expect to move for jobs or to be closer to family and do not want to be tied to a specific property. Some also might be expecting to upgrade homes quickly and may not want to buy and sell in quick succession. Younger generations also are a big market for single- family rentals, as many are either unable to buy or not ready to settle down yet. The rise in popularity of single- A New Age of Housing An economist looks ahead to not only what the next year holds for the industry—but the next decade. By Tian Liu