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Millennials, Baby Boomers Will Help Determine Housing Future
Hancock Mortgage Partners, LLC
According to the Harvard Joint Center for Housing Studies, homeownership is at 65% its lowest point since 1995. While the drop off in home ownership spans many different demographic groups, the sharpest decline in ownership rates has come among people in their late 20s to early 40s. Researchers say homeownership among this age group has fallen 8% since 2004.
Potential reasons are many. Young adults continue to live with the parents as they work to pay down student loans and grow their incomes. Yet, it’s these young adults who will likely make the biggest impact on home ownership growth in the future.
Here’s why: when Baby Boomers began establishing homes in the 1970s, household formation averaged 1.7 million units a year for the entire decade. As the largest generation since the Baby Boomers, the Millennials stand to make a big impact on home sales once they do start buying. Millennials will make up 24 million new households between 2015 and 2025, increasing both homes sales and rentals.
Baby Boomers are continuing to have an impact on the housing market, at least in the short term. According to Harvard researchers, the aging of Baby Boomers will actually increase the number of households age 70 and older by about 8.3 million.
With Millennials looking go out on their own and Baby Boomers aging in place, the number of new households should grow over the next decade. That means more homes will be purchased, alleviating the low rate of homeownership over the past decade.