However, gap will narrow as more millennials turn 30
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Millennials choosing to delay their homeownership goals may be the reason for the gap between the high demand for homes and plunging homeownership rates.
The latest annual First American Homeownership Progress Index (HPRI) showed that, while potential homeownership demand rose 0.66%, the homeownership rate continued to underperform by 8.7% in 2018.
Mark Fleming, chief economist at First American, said that it may be because millennials are simply not ready to settle down just yet.
“When broken down by age group, we find that the majority of the demand for homeownership in 2018 and 2017 was driven by the millennial generation, those between the ages of 23 and 37,” said Fleming. “Even though they drove the bulk of actual homeownership demand in 2018, millennials and their lifestyle choices may explain why the homeownership rate remained below potential demand. Millennial lifestyle choices to delay marriage and children are part of the reason the actual homeownership rate is lower than potential homeownership demand.”
As more millennials reach the age of 30, however, the gap between their homeownership potential and actual homeownership rates will narrow.
“We expect the homeownership rate to further close the gap with potential in the years ahead as millennials continue to make important decisions, such as attaining an education and, later in life, getting married and having children,” said Fleming. “Looking ahead, as the bulk of millennials turn 30 next year and age into homeownership, the one question remains: will the housing market have enough homes for them to buy?”
