Mark Fleming Fleming: “The housing crisis could have tarnished the dream of homeownership in America, but instead homeownership remains a strong beacon for Americans and enduring symbol of success.”

 

SANTA ANA, CA—“Given Generation X has a high homeownership rate, and Generation Y is expected to as well, I would expect nothing different from the youngest generation,” First American Financial Corp.’s chief economist Mark Fleming tells GlobeSt.com. As we recently reported, ccording to a recent report from the firm, increasing educational attainment indicates the prospect for higher income levels and homeownership demand among Millennials.

Homeownership does tend to be a local issue, Fleming says. “While the national homeownership rate declined modestly in 2016, homeownership rates varied significantly at the market level. Small changes in potential homeownership demand hide the large amount of variation in markets across the country. The underlying factors that the Homeownership Progress Index accounts for can vary substantially by region of the country and market. Regions or markets with stronger local economies and that can attract increasingly educated Millennial households will have stronger homeownership demand in the future.”

In addition, he says, half of the top-10 markets for year-over-year growth in potential homeownership demand are in either California or Texas, while eight of the bottom 10 markets are on the East Coast or in the Midwest.

We spoke with Fleming about the next generation following the Millennials and what their tendency to own homes might be.

GlobeSt.com: We know that Millennials are predicted to increase their homeownership rate as they age, but what about the generation behind them?

Fleming: Homeownership begets homeownership. One of the strongest indications of likely homeownership is if others in the family, particularly parents, are homeowners. Given Generation X has a high homeownership rate and Generation Y is expected to as well, I would expect nothing different from the youngest generation.

GlobeSt.com: In which markets are Millennials preferring to buy homes now?

Fleming: Demand is where the jobs are. Big cities on the coasts, but also some more affordable cities, like Charlotte, NC, are popular for their higher degree of affordability.”

GlobeSt.com: What size, type and characteristics of homes are they seeking?

Fleming: Small is more affordable—not the McMansion. Smaller and older homes tend to be more affordable. As with generations past, the first home for many is not the dream home, but a start nonetheless.

GlobeSt.com: What else should our readers know about future homeownership demand?

Fleming: The housing crisis could have tarnished the dream of homeownership in America, but instead homeownership remains a strong beacon for Americans and enduring symbol of success.