According to Housingwire Millennials are finally buying homes. Ben Lane reported, “Back in September, after existing home sales fell to a three-year low, it appeared that many younger would-be buyers were turning to renting instead of buying. But things look much different just a few months later.”
The increase is being driven by younger buyers under the age of 44, and yes, that includes the older portion of Millennials. Homeownership among buyers age 35 and under rose from 36% to 36.5% in the last year, while homeownership for those from age 35-44 rose from 58.9% to 61.1% in the same time frame. According to CoreLogic’s Ralph McLaughlin, young households, which represent the largest pool of potential homebuyers in the United States, are starting to enter the homeownership game.
Millennials may have been slow to start, but that seems to be changing. Historically, Millennials have been reported to:
- Have delayed marriage having kids, but that is finally happening.
- Wanted to enjoy more experiences than traditional activities of buying a home – but that’s changing.
- Been happy/content living at home, but they are finally getting tired of that or getting kicked out.
- Have had student debt challenges, but are finally making enough to be able to handle a home debt.
By the end of 2018, Millennials represented 45% of all new mortgages, compared to 36% for Generation X, and 17% for Baby Boomers, Realtor.com reported to Housingwire. Millennials have now surpassed older generations in the total dollar amount of mortgages, and represent the largest dollar volume by age group. Javier Vivas of Realtor.com says Millennials are getting older, and have better jobs and deeper pockets, allowing them to get into home ownership. They are, however, focused on home affordability, and shocker, are not always picking the large metros as many may think. Instead, they are looking for strong job markets and lower cost options in more non-traditional areas, i.e. Buffalo, NY. In addition, Millennials consistently made lower down payments than other generations since 2015, which is not surprising as a first-time homebuyer.
More Positive News
In Q1 2019, the U.S. Census Bureau reports a flattening in homeownership at 64.2% year over year, breaking an eight quarter streak of gains. CoreLogic attributes this flattening to an uptick in renters, although owner household growth continues to outpace renters. Ralph McLaughlin of CoreLogic brings us a very positive trend change to watch in his April 25th article:
- The first quarter of 2019 was the sixth consecutive quarter that owner-occupied households grew by more than a million, at nearly 1.1 million new owner households.
- The number of new renter households jumped by close to half a million. This is a significant change in trend, as renter households previously fell six out of seven quarters.
- Total household growth remains remain strong, topping 1 percent for six straight quarters, and continues the most significant streak of household growth in more than 12 years.
McLaughlin reports that data shows increasing evidence that not only are young homebuyers indeed pursuing the American dream of homeownership, but solid household growth overall should continue to support healthy demand over the next two decades. An estimated 46 million new households under the age of 30 will push up demand for both owner and renter-occupied homes over the next two decades. Despite recent headwinds and signs of a market cooldown, these demographic fundamentals should lead to a healthy housing demand through at least 2040.
This is great news for the housing market.
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U.S. Census – https://www.census.gov/housing/hvs/index.html