According to U.S. Census Bureau and First American calculations, over the next 10 years, Millennials are expected to purchase at least 10 million new homes. By 2060, it is estimated that the generation will have produced more than 20 million first-time homebuyers.
In a recent note, Odeta Kushi, a senior economist for First American, a real estate service provider, said Millennial demand for homeownership was one of the biggest trends influencing the housing market in 2018. This is unlikely to reverse going into next year, the year after that, and many years to come.
While this generation is often “mistakenly portrayed” as showing a preference for renting, Kushi notes this is not correct; Millennials still appreciate buying a home but have different motivations and delays in doing so:
“Because they grew up in the wake of the housing bust, Millennials are less likely to consider homeownership as a means of building wealth and, therefore, choose homeownership based more on whether homeownership fits their lifestyle or not. Our research shows that, because lifestyle choices are the most important factors influencing the decision to become a homeowner, it is reasonable to expect the homeownership rate for Millennials to increase as more get married and form families.”
While the homeownership rate for young adults is currently quite low, with just over one-third of adults under 35 owning a home, the potential for home sales is high. Kushi notes that more than half of all the purchase mortgages guaranteed by Fannie Mae and Freddie Mac in 2018 went to first-time homebuyers.