More Young People Are Buying Homes

Theres a common misconception that younger generations arent interested in homeownership. Many people point to the fact that millennials put off purchasing their first home as a reason for this belief.

Odeta Kushi, Deputy Chief Economist forFirst American,explainswhy millennials have put off certain milestones linked to homeownership. Those delays led to their homeownership rates trailing slightly behind older generations:

Historically, millennials have delayed the critical lifestyle choices oftenlinked to buying a first home,including getting married and having children, in order to further their education. This is clear in cross-generational comparisons of homeownership rates which show millennials lagging their generational predecessors.

 

Photo byRODNAE ProductionsfromPexels

So, its partially true thatsome millennialshave waited on homeownershipto focus on other things in their lives and thats impacting certain housing market trends.

Data from theNational Association of Realtors(NAR) indicatesthe average age of a first-time homebuyer is higher today than its been over the past 40 years. As the graph below shows, homebuyers today are purchasing their first homean average of4 years laterthan people in the 1980s and early 1990s:

Just because millennials are hitting certain milestones later in lifedoesnt mean theyre not interested in becoming homeowners. The recentU.S. Censusreveals a significantincrease inhomeownership ratesfor millennials and other young homebuyers.

As the graph above shows, millennials are entering the market in full force, and their share of the market is growing. Based on the data,the belief that younger generations dont want to buy homes is a misconception.In fact, the recentCapital Market Outlookreport fromMerrill-Lynchfurther drives home this point, as it specifically mentions the effect millennials are having on demand:

Demand is very strong because thebiggest demographic cohort in history is moving through the household-formation and peak home-buying stages of its life cycle.

Kushi is following the trend of millennial homeownership and puts it more simply,saying:

. . .it's clear that younger households (millennials!) are driving homeownership growth.

As the largest generation, millennials impact on the market is growing as more and more people from that generation reach homebuying age and Generation Z isnt far behind, either. That means younger generations will likely continue todrive demandin the housing market for years to come.

Bottom Line

If you're a member of a younger generation and interested in purchasing a home, you're notalone. Many of your peers are on their path to homeownership, too. Connect with us today and discuss what we can do to accomplish yourhomebuying goals.