Do Millennials still value homeownership?

Welcome to 2019!

A new year gives us new innovation and changes to look forward to. In the original Blade Runner, it was imagined that we would all be driving flying cars and living among robotic “replicants” by now. We’re not quite there yet; however, lots have changed since 1982 when the movie was first released. Coincidentally, 1982 was also the year when the U.S. Census Bureau began tracking homeownership rate by age group, when homeownership among adults under age 35 was 41%. Today, that figure has declined to 36.8%.

The ValueInsured Modern Homebuyer Survey does not go quite as far back as 1982, though it has been tracking Americans’ desire to own a home quarterly for over two years. According to the survey, the desire to own the American Dream among millennials (who are not already homeowners) remains high, currently at 71%. It has, however, been trending down:

Millennials who say they wish to own a home:

  • Q1 2017: 84%

  • Q2 2017: 81%

  • Q3 2017: 78%

  • Q4 2017: 74%

  • Q1 2018: 77%

  • Q2 2018: 77%

  • Q3 2018: 73%

  • Q4 2018: 71%

The above trend line indicates millennials’ desire for homeownership has not cracked 80% in over 18 months, and is dipping dangerously close to the 60’s in the most recent quarter. Millennials’ waning housing enthusiasm is likely correlated with the declining affordability of owning a home. In Q4 2018, among all U.S. millennial non-homeowners who have favorable attitude toward homeownership, only 32% believe they could afford a down payment, compared to 44% in Q1 2017 (down 12 percentage points). During the same period, desire for homeownership dropped 13 percentage points.

Today, 36% of all millennials believe they need to give up most other spending including vacations, shopping, entertainment and eating out in order to afford their first home. Also, only 43% of millennials believe buying a home today is a secure financial investment, down 16 points from 59% in Q1 2017. In other words, millennials today find homeownership to be less attainable, require more sacrifices, and riskier. It is not a surprise that their desire for homeownership dropped during the same period.

One silver lining: historically, millennials’ reported desire to own home tends to get a bump in Q1, possibly due to new year enthusiasm and optimism. It would be interesting to see if millennials report the same renewed optimism in the next Q1 2019 Modern Homebuyer Survey, to be released in February.