As Millennials get older, they are increasing homeownership rates faster than in previous years, according to research from Fannie Mae.
Fewer Millennials are buying homes than previous generations, true. However as they get older, they are making up for lost time; The rate of increase for Millennials is significantly higher than the rate of increase for previous generations.
This is due to the fact that, whereas other generations bought their homes at a younger age, Millennials did not.
Now, as the housing market continues to recover, more Millennials are moving into homeownership. Some oft-cited reasons for the possible delays are commonly believed to be onerous student debt levels and a preference to renting.
The below chart shows the gap between how many Millennials bought a home in 2014 versus how many of that same age group bought a home in the years before, according to data from the U.S. Census Bureau.
[Bear in mind, Fannie Mae's Housing Insights series examines public data sources and does not conduct surveys as part of its research.]
While young-adult homeownership is increasing overall, today’s generation is still running that age group in previous years.
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(Source: Fannie Mae, U.S. Census Bureau)
For frame of reference, Millennials in 2016 are defined as ages 18 to 36. That being said, for 2014 Millennials would include up to age 34, up to age 32 in 2012, age 30 in 2010, age 28 in 2008 and up to age 26 in 2008.
That being said, Millennials are clearly making up for lost time. This chart shows that current older Millennials are increasing at a faster rate than previous years. If this trend continues, they could even soon pass up young-adult homeownership rates from years before.
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(Source: Fannie Mae, U.S. Census Bureau)
A study conducted by Genworth Mortgage Insurance at the 2016 Mortgage Bankers Association Secondary Conference in New York City showed that, while Millennials delayed homeownership longer than other generations, the industry expects that they are about to move into the housing market.
In fact, some are starting to realize that Millennials are the key to future growth in the industry. Credit unions are growing, and Millennials are both a key driver and a target market for sustained loan growth, according to a study by TransUnion.
There are, however, several problems holding Millennials back as they begin to enter the market. There’s an extreme shortage of inventory in the housing market. Hopefully this, too will soon resolve itself.
The most recent homebuilder confidence report recorded that homebuilders exhibited some optimism for the coming months.
