The conventional wisdom on Millennials (also known as Generation Y, typically born between the early 1980s and late 1990s) is that they’re fearful of purchasing a home, and they are less inclined to homeownership than their Baby Boomer parents. But a new study released by the University of Washington, Seattle, suggests that, although Millennials may postpone buying a home, they continue to aspire to own one.
A major housing boom in the 1990s through 2006 and subsequent real estate market collapse interrupted the normal homeownership progression for Generation Y, explains Glenn Crellin, author of the study. However, demographics and historic patterns of homeownership indicate that a strong demand for homeownership exists among Millennials.
“Despite all the recent hype in the media about the Millennial generation not becoming homeowners, if you look at their homeownership rates compared to the Baby Boom generation when they were roughly the same age, you’ll find that Millennials are actually ahead of Boomers in terms of acquiring homes today,” says Crellin, who is associate director of the Runstad Center for Real Estate Studies.
The data show that in fact, Millennials are not dismissing the notion of owning a home — just postponing it, as they do with many other life decisions.
In some cases, Crellin says, they are “temporarily delaying homeownership decisions due to economic challenges.”
Many Millennials today view homeownership not exclusively as an investment but rather as a means to raise their families, Crellin says.
Generation Y prefers larger homes than the ones they currently occupy and aim for single-family-friendly markets that offer closer proximity to where they work, rather than the distant suburbs where their parents live.
Crellin adds that the lack of employment opportunities, rising housing costs and stringent down payment and loan qualification requirements will continue to challenge Millennials in their pursuit of homeownership.
Going forward, Crellin still expects housing demand to solidify for various reasons. “Younger [prospective buyers] who have the financial wherewithal are starting to say, ‘It’s time to get into the market now,’ before interest rates increase too much,” he says. — Erik J. Martin © CTW Features