Last week, the housing industry celebrated a latest NAR report that Millennials are finally making a move into housing, surpassing Baby Boomers as the largest generational segment of homebuyers, and responsible for 36% of home purchases in 2017.
But upon further inspection, and as both NAR and National Mortgage News astutely called out, Millennials are still underperforming as homebuyers to their full potential. After all, when you represent the largest population segment in the country and are in prime life stage for marriage and family formation, it is not too hard to overtake Baby Boomers, many of whom are downsizing, shifting to rentals, or moving in with their family. Homeownership rate among Americans under age 35 is currently at 36% (not to be confused with Millennials’ home purchase share, which is also 36%) according to the latest U.S. Census report. It is a substantial drop from the same age group’s homeownership rate pre-2008 housing crisis, at 43%. In other words, the housing industry has lost 1 out of every 6 under-35 homebuyers in the past decade.
The good news: Millennials’ desire to become homeowners remains high. In the latest ValueInsured Modern Homebuyer Survey, conducted in February, 77% of all American Millennials who do not currently own a home want to become homeowners, and 72% who don’t own a home believe owning is better than renting. The less good news: as home prices heat up, Millennials’ enthusiasm to buy now and their confidence in buying as a smart investment have gradually dropped over the past year.