September 25, 2014 1:46 am
The economic future of Millennials is key to the future of housing demand. A record number of individuals aged 18 to 34 years are delaying household formation as a consequence of the Great Recession. We referred to this situation as the ‘Great Delay,’ as slow wage growth and rising student loan burdens have reduced attainment of traditional goals associated with the American Dream, including marriage and homeownership.
An important research question is whether these delays represent deferrals due to economic conditions or true changes in preferences and goals.
A recent survey from the Demand Institute provides new evidence. The study surveyed 1,000 18 to 29 year olds about current conditions and market preferences. The findings indicate that homeownership remains an important long-term goal.
Among the findings for Millennials:
- Over the next 5 years, 8.3 million new Millennial households will form.
- Seventy-four percent plan to move over the next five years, with the top reason being need for better housing.
- Sixty-four percent expect to be married in five years and 55 percent expect to have kids.
- Seventy-five percent believe homeownership is an important long-term goal and 73 percent believe ownership is an excellent investment.
- Twenty-four percent currently own a home and another sixty percent plan to purchase.
- Thirty-six percent expect their next home to be a multifamily rental, while another 36 percent expect it to be a single-family owner-occupied residence.
- Forty-eight percent prefer their next home to be in the suburbs, while 38 percent want urban locations.
- Eighty-eight percent own a car.
- Student loans do delay homeownership (but college raises lifetime incomes).
- Forty-four percent think it will be difficult to qualify for a mortgage.
Published with permission from RISMedia.