Matthew Gardner, chief economist for Windermere Real Estate, has been sharing his predictions and breaking down the statistics on millennial homebuyers. He talks about how there are several factors that have kept the millennials renting, but they won't last forever.
- Many believe that millennials will continue to be renters and not homeowners for various reasons.
- The first of the millennials were not even in a position to consider buying until roughly 2008.
- Credit has become tighter for older buyers; therefore, the recent rise in first-time buyers actually can be attributed to millennials.
Millennial Homeownership Rates
To start with, the first of the millennials (born in 1982) were not even in a position to consider buying until roughly 2008. That accounts for four years of college followed by two years of work.
We all know that 2008 was a terrible year to buy a home, so let’s bring it forward a little further to 2012. At that time, the ownership rate was roughly 36.7 percent. Since then, it has dropped to the current level of 34.6 percent. This drop is hardly a drastic one, but it is a drop all the same — so what happened?
Fewer Urban Options
I would add to this that urban life simply appeals more to younger people than living in the suburbs; especially to those who are just starting their careers and don’t yet have a family. But the options to buy in many cities are few and far between. Since the Great Recession, there has been a shortage of new, for-sale multifamily development, which limits the availability of urban housing for buyers.
The Makeup of First-Time Buyers
To better understand the makeup of first-time buyers, I started by looking at their age distribution. First-time buyers are actually not getting older. Although their numbers tumble after the crash of the housing market, the age distribution did not change drastically.
Now, if we believe that the decline was driven by the millennials, surely we would have seen first-time buyers getting older, but interestingly enough, they didn’t.
These broad statements that people are making about millennials being perma-renters are unfounded. Are many of them delaying their purchasing decisions? It appears so, but I expect them to move into homeownership in greater numbers as they start to marry, have families or simply find themselves paying too much in rent.
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