Millennials on the Move

By Ryan Dosen

 

According to the 2014 National Association of Realtors’ Home Buyer and Seller Generational Trends report, Millennials (those born from 1980 to 1999) recently passed Baby Boomers (those born from 1946 to 1964) as the largest of this country’s named generations. Despite facing several headwinds, this largest generation is expected to drive demand for an improved real estate market for quite some time.

 

About Millennials

The Pew Research Center recently released its “Millennials in Adulthood” report, discussing trends for a generation that is “relatively unattached to organized politics and religion, linked by social media, burdened by debt, distrustful of people, in no rush to marry—and optimistic about the future.”

According to Pew, “Millennials are also the first in the modern era to have higher levels of student loan debt, poverty and unemployment, and lower levels of wealth and personal income than their two immediate predecessor generations (Gen Xers and Boomers) had at the same stage of their life cycles.”

These difficulties, coupled with having to face the Great Recession (2007-2009) at a time when many Millennials were looking to begin or take important early steps in their professional careers, have made it a particularly tough road for this generation.

Despite Millennials’ troubles, Pew says that this group represents “the best-educated cohort of young adults in American history,” with a third of older Millennials having a four-year college degree or more.

It is entirely possible that this highly-educated and optimistic generation has simply needed more time to establish themselves financially before they marry and take the next steps for home ownership. Median ages for marriage are now the highest in history (29 for males and 27 for females) and Pew’s numbers indicate that almost 70 percent of unmarried Millennials have simply been waiting on marriage (read: new home formation) until they establish a more solid economic foundation.

 

Millennials and the Key to the Housing Recovery

Harvard University’s “The State of the Nation’s Housing” report for 2014 portrays Millennials as the key for a stronger housing recovery. Chris Herbert, research director at Harvard’s Joint Center for Housing Studies, says that the “housing recovery is following the path of the broader economy (and as) long as the economy remains on the path of slow, but steady improvement, housing should follow suit.”

Despite the generation’s mountains of student loan debt and their tendency to stay at home and live with their parents, the report says that “given the sheer volume of young adults coming of age, the number of households in their 30s should increase by 2.7 million over the coming decade, which should boost demand for new housing.” Daniel McCue, research manager for the Joint Center, concludes that “[u]ltimately, the large millennial generation will make their presence felt in the owner-occupied market…just as they already have in the rental market, where demand is strong, rents are rising, construction is robust, and property values increased by double digits for the fourth consecutive year in 2013.”

 

Millennials Ready and Willing to Spur Housing Market

Harvard says that demographics simply dictate the fact that there will be significant housing growth over the next decade, largely driven by the large and important Millennial generation. This is a generation that will not only need to buy more homes—they want to buy homes and see buying homes as a smart investment (the NAR’s Generational Trends report states that 87 percent of buyers under 33 see buying a home as a good investment).

The Harvard report says that the key to everything is a continued recovery, translating eventually into more jobs and higher incomes for this under-employed-if-employed-at-all generation. Once this Millennial generation has more money and is able to more easily afford and qualify to buy homes, they will do just that—it’s only a matter of time.

 

— Ryan Dosen manages The Wayne Megill Real Estate Team of Keller Williams Brandywine Valley in West Chester. Contact Ryan for buyer or seller representation or for more perspective on the local and national real estate market by emailing rdosen@megillhomes.com or calling 610-399-0338. Please also visit The Wayne Megill Team blog at www.PAHomesAndRealEstate.com.