The group has been mistakenly portrayed as the "renter generation"
First American expects millennials to continue driving homeownership demand despite their image as a “renter generation” given demographic tailwinds that are starting to appear in the market.
While the generation is fueling homeownership growth, First American noted that the homeownership rate for young adults is quite low compared to baby boomers and Generation X when they were under 35 years old.
First American said these trends should be evaluated in the context of millennials’ lifestyle choices as well as the lingering impact of the great recession on attitudes toward homeownership. Millennials have delayed marriage and having children in favor of investing in education, in effect delaying homeownership among the group. Additionally, millennials are less likely to consider homeownership as a means of building wealth because they grew up in the wake of the housing bust.
While rental households have surged since the end of the Great Recession compared to new homeowner households, First American said demand from first-time buyers has been surging in the most recent periods. Data showed that more than half of all the purchase mortgages originated by Fannie Mae and Freddie Mac in 2018 went to first-time home buyers.
Additionally, First American said it expects aging millennials to purchase at least 10 million new homes over the next 10 years. It also estimated that millennials will have produced more than 20 million first-time home buyers by 2060.
“Aging and the lifestyle choices that come with it – particularly marriage and children – are important factors driving homeownership demand. That’s why millennials aging into their thirties, getting married, and having children will have a profound impact on the housing market,” First American said.
