The U.S. millennial generation–the group of people 18 to 34 years of age–is projected by The Census Bureau to exceed 75 million and surpass the baby boomers to become the largest generation this year. The attitudes and actions of members of this group will influence the health and dynamics of U.S. housing markets in the coming decades more than those of any other population segment. This is why monitoring the millennial mindset concerning the housing market will be important for years to come.
Since the historic U.S. housing bust, there has been much speculation that millennials would lead a secular shift away from homeownership. However, as we reported last year, millennials–despite stagnant income growth, increasing student debt loads, and in some cases, painful foreclosure crisis experiences–still have a hearty appetite for homeownership. Data from the latest U.S. Housing Confidence Survey confirm that their sentiments concerning the housing market remained upbeat.
Overall, the attitudes of millennials concerning the housing market continue to be more optimistic than those of the members of all other generation cohorts.
- Although down from 74% in July 2014, a vast majority (70%) of millennial households still believe that owning a home provides a person more freedom than renting one.
- More than two-thirds (67%) of millennial renters say that owning a home someday is a specific goal that they are determined to reach (although not as committed, another 17% of millennials say that owning a home is something they think about a lot).
Notwithstanding their uncertain income growth prospects in the near-term, increasing student debt loads, and expectations that mortgage rates are likely to increase in the near future, 84% of millennial renters are now confident, or somewhat confident, that they will be able to afford to own a home someday (this figure was up from 82% in July 2014).
- Almost three-quarters (73%) of millennial renters expect to buy a home by the year 2020.
Financial capacity, creditworthiness, and down payments remain the primary homeownership hurdles for millennial renters in the near term. However, the strength of their housing confidence is an encouraging measure of millennial mindset and character and bodes well for the long-term health of U.S. housing markets.