Millennial homeowners confident in the long term, but fear housing volatility in the near term

In each of our recent quarterly ValueInsured Modern Homebuyer Survey, Millennial homeowners have consistently proven to be the most confident consumer segment in the health of our housing market. Compared to the national housing confidence index of 68.9 recorded in September 2016, Millennial homeowners reported an 83.0 point housing confidence in the same index, higher even than the 78.1 recorded for all American homeowners. Millennial homeowners also show remarkable confidence in their own long-term well-being as homeowners, with 90% agreeing “the housing market is headed to a good direction long-term for people like me”, compared to just 38% of their non home-owning peers who say the same.

However, upon further digging into our latest fall survey data, Millennial homeowners do show some cracks in their robust housing confidence. Many believe the housing market is currently overheated, and likely headed for a bubble and price correction:

  • 83% of all Millennial homeowners surveyed say “I believe there will be a housing bubble and price correction in my area in the next two years”, compared to just 28% Millennial non-homeowners and 47% of all Americans who say the same.
  • 84% of all Millennial homeowners surveyed believe “housing prices in my area are currently overpriced and not sustainable”, compared to just 51% Millennial non-homeowners and 54% of all Americans who say the same.

These expectations among our twenty- and thirty-something homeowners point to concerns they have that their home may be valued less than it is now if they sell in the near future. Millennial homeowners are most vulnerable to short-term housing market fluctuations, as they are the most nomadic among all age groups. According to the latest Census Bureau data, the average job tenure for Millennials is 2.8 years. Our own survey data shows 81% Millennials plan to live in their current home for under 5 years, and over 6 out of 10 (62%) plan to stay in the same home for less than 3 years. With such high demand for mobility, it is not surprising that a potential job loss or job change is the number-one concern for Millennials when they think of the risks of buying a home.

Millennial homeowners are not only concerned about having to move and sell for their careers, many are in starter homes and plan to upgrade as their young family grows. This modern homeowner reality is heightened with today’s home prices, when many Millennials buy what they could afford, even if it means it is a home they know they would outgrow in a few years. 92% Millennial homeowners surveyed said they want to sell and upgrade to another home.

Most telling, 91% Millennial homeowners say they would want to sell and upgrade sooner if they could have more confidence they would not lose their down payment. 65% of non-homeowning Millennials also say they would buy their first home sooner if they could have more confidence they would not lose their down payment in the event they have to sell unexpectedly and the market happens to be down.

Our data across multiple measures point to a consistent theme: our next-gen homebuyers demand mobility and flexibility. While most are optimistic about the long-term benefits of owning a home, their tendency to be nomadic in the near-term exposes them to increased risks of buying a home. They expect near-term market volatility and price correction, and are not certain they could sell their home for same or more than what they paid for if an unexpected move arises.