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'Lost Generation' of Homeowners May Just Be on Hold

Real estate agent Shellie Young (R) shows a rental home to Dorothea Tittel in Miami. Many young people are now considering renting instead of buying.
Real estate agent Shellie Young (R) shows a rental home to Dorothea Tittel in Miami. Many young people are now considering renting instead of buying. Photograph by Joe Raedle/Getty Images

Blase Hennessy is about halfway through a three-year residency in internal medicine at Wexner Medical Center at Ohio State University, with full-time job offers already wafting in. Last spring the 27-year-old flirted with the idea of buying a condo for the duration of his residency, figuring he could sell it and make a few bucks if the job market pulls him out of Columbus. Then he learned his landlord had paid $200,000 for the one-bedroom roughly five years ago. And that for almost two years it had sat on the market listed for only $150,000. “When I saw that, I said, ‘Forget it,’” Hennessy says. “It’s just too scary.” Today he rents the unit instead.

For some analysts, the scariest outcome of the collapsed home-price bubble is that it could turn an entire generation of would-be homeowners into perma-renters. Yale economist Robert Shiller floated the idea of a “lost generation” of homeowners in interviews with Reuters and Yahoo Finance. He thinks there is a chance that home prices in the suburbs may never rebound in our lifetimes.