Millennial Hunger For Home Ownership May Be Greater Than We Realize
The way we have been measuring millennial demand for homeownership may be been skewed. A report from Fannie Mae and the University of Southern California tackles a new approach that shows millennials are more enthusiastic about home ownership than realized.
Erika Morphy|December 05, 2017 at 12:13 PM|Originally published on
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WASHINGTON, DC–Millennials have been less likely to buy a home than previous generations for several reasons including the far-ranging impact of the Great Recession and their own inclinations to renting in urban areas. Or so the theory went. Now, new research from Fannie Mae and the University of Southern California suggest that this cohort may have been participating in the housing market more than realized. Perhaps more importantly, it shows that this group is poised to have a major impact on housing demand going forward. “[W] the economy in recovery mode for nearly a decade…Millennials [are] beginning to increase their attainment of home ownership,” report authors Patrick Simmons of Fannie Mae and University of Southern California’s Dowell Myers wrote.
The study analyzed recent data from the Census Bureau’s American Community Survey. What is significant is that two different change-measurement approaches were used in the study — and they yielded dramatically different views on the state of millennial home ownership.
Millennials Can Move the Needle On The Housing Market
The findings are significant for the US housing industry overall as millennials could help end a frustratingly slow housing recovery. “With more than 88 million members, the millennial generation has the sheer bulk needed to propel the housing recovery to a higher level and it now fills the 25-34 year-old age range that traditionally accounts for the most first-time home buyers,” Simmons and Myers wrote.
The Traditional Age-Group Approach
One approach, called the Traditional Age-Group Approach suggests that millennial home ownership demand will continue to slumber. According to the report:
This “age-group” approach compares the cumulative home ownership attainment for different groups of individuals at the same age but at different points in time. Cumulative home ownership attainment at a given age reflects not only a group’s current rate of ascent into home ownership under prevailing economic conditions, but also the legacy of its past pace of advance under sometimes very different economic circumstances. This is certainly the case for Millennials in their 30s, whose current home ownership rate reflects not only recent home-buying activity in a healthy economy, but also earlier housing decisions made amidst one of the worst economic downturns in US history.
The report noted that applying age-group analysis to the Census data reveals no rebound in young-adult home ownership rates despite years of economic recovery.
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
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