Millennial Homeownership Demand ‘Awakening’
New research from the University of Southern California and Fannie Mae says the 88-million strong Millennial generation is increasingly flexing its muscles in the housing market.
The study (http://www.fanniemae.com/portal/research-insights/perspectives/millennial-homeownership-demand-myers-simmons-112917.html?utm_source=fmcom&utm_medium=mediadist&utm_campaign=esrperspective_112917) suggests Millennials, who now fill the 25-34 age range that traditionally accounts for the most first-time homebuyers, are poised to have a major impact on housing demand.
“Despite their impressive numbers, Millennials’ impact on the housing market has been muted due to a lower likelihood of buying homes than prior generations,” said report authors Patrick Simmons (Fannie Mae) and Dowell Myers (USC). “The Great Recession undoubtedly slowed young adults’ initial ascent into homeownership. Now, with the economy in recovery mode for nearly a decade…Millennials [are] beginning to increase their attainment of homeownership.”
The study analyzes recent data from the Census Bureau’s American Community Survey. The authors said comparing a traditional age-group analysis with an alternative cohort analysis yields dramatically different views on the state of Millennial homeownership.
Age-group analysis of the data suggests that Millennial homeownership demand continues to slumber. This perspective, which focuses on cumulative homeownership attainment as of a given age, reveals no rebound in young-adult homeownership rates despite years of economic recovery. However, a cohort perspective–which disentangles current from past home-buying behaviors–reveals a sharp awakening of Millennial homeownership.
The cohort analysis shows the pace of young-adult home purchases accelerated substantially during the economic recovery and quickened further through. For every age transition above 22-23 through 24-25, increases in cohort homeownership rate between 2014-2016 were significantly greater than the gains registered from either 2008-2010 or 2010-2012.
The authors said compared to the age-group approach, the cohort perspective suggests a more optimistic outlook for Millennial homeownership demand–and casts doubt on the notion that young adults have diminished preferences for buying homes.
“With their recently accelerated ascent into homeownership, Millennials have already begun to close the homeownership attainment gap with their predecessors,” the report said. “If this acceleration continues, traditional age-group analysis will eventually show an upturn in young-adult homeownership rates.”
