Millennials Lag Previous Generations on Home Buying
Nov - Dec 2014 - NWREporter
Real estate professionals probably won't be too surprised by this statement:
Millenials are less likely to be homeowners than young adults in previous generations.
That fact was one of 15 in a new publication from the Council of Economic Advisers (see box below). The 49-page report titled "15 Economic Facts about Millennials" looks at how this diverse and well-educated generation is faring in the labor market and "how they are organizing their personal lives," so far.
Millennials represent one-third of the total U.S. population. Noting the significance of this cohort (those born between 1980 and the mid-2000s) extends beyond their numbers, the authors believe they "will shape our economy for decades to come."
Declining homeownership rates among Millennials are a consequence of the Great Recession and recovery. An estimated 31 percent of those ages 18 to 34 lived with their parents in 2014, up from 28 percent in 2007. The pace of household formation is low and the rate at which Millennials head their own households has fallen, prompting the report's authors to conclude "With fewer Millennials as independent renters or homeowners, the demand for housing and the pace of residential investment is likely lower than the level implied by more typical rates of household formation and headship."
Three forces are in play with regard to drops in homeownership, according to the report:
- The gradual shifts in labor force participation, increased college enrollment, and delayed marriage;
- Challenges in the labor market (which for some Millennials means being renters to maintain more flexibility in location decisions as job opportunities arise); and
- The tight lending environment.
On a more encouraging note for real estate brokers who understand factors that influence a community's quality of life, Millennials want to make a positive social impact. They value staying close to family and friends, having free time for recreation, and working in creative jobs.
The Council of Economic Advisers, an agency within the Executive Office of the President, is charged with offering the President objective economic advice on the formulation of both domestic and international economic policy. The Council, established in 1946, bases its recommendations and analysis on economic research and empirical evidence.