We’re all accustomed to blaming millennials for Coachella, job hopping, and safe space demands, but increasingly, they’re being blasted for their role in housing.
Today, Redfin released survey results expressing how this generation impacts housing differently than their predecessors, and how each generations’ attitudes toward homeownership differ.
Before playing the blame game, let’s outline how Redfin says millennial homeowners are different:
- “Millennials are more bullish about home prices,” Redfin states, asserting that the majority (86 percent) of homeowners under the age of 35 believe home prices will increase in the coming 12 months. Fully 24 percent of homeowners over 35 said prices will stay the same, only 11 percent of millennials agreed.
- Affordability is less of a concern for millennials, with 63 percent saying they’ll be able to afford living in their city in a decade, while only 51 percent of those aged 45 to 54 said the same. Any generation that feels they’ve “seen this movie before” is likely to be more apprehensive.
- Millennials are on the move. Over half said they’ll leave their current home within five years, with only one in four Boomers saying the same.
- “Millennial homeowners are more likely to be ‘house rich’ in the future,” which Redfin attributes to historically low mortgage rates. “For millennial homeowners, cheap borrowing and bullish price expectations will lead to a mass generational rethink about when and how to trade up from a starter home.”
- Millennials are more likely to become landlords, with 28 percent planning on renting out their home when they move instead of selling it. Compare that to only four percent of homeowners over 55 that plan on being landlords.
This echoes other sentiments
NAR Chief Economist Dr. Lawrence Yun said in his recent economic forecast, “Current homebuyers are the luckiest in generations on mortgage rates.” That said, he admits that student debt, inventory, high rents, and increasing home prices (affordability) are “hurdles” that still need to be overcome.
At the recent National Association of Realtors Legislative Meetings & Trade Expo, a tremendous emphasis was put on student debt plaguing the real estate and economic recovery, but with the bullish nature of Millennials reported by Redfin, the big sin of this generation isn’t a lack of interest in homeownership, rather a thirst for it.
“For the lucky few millennials who can afford to buy in the current bull housing market, there’s a lot of upside to holding on to their starter homes,” said Redfin chief economist Nela Richardson. “Rising rents, short tenure clocks, bullish price expectations and rock-bottom mortgage rates make housing a good permanent investment for millennial homeowners. This preference by millennials to rent out their home instead of selling it will likely ensure that the chronically low supply of homes for sale remains a persistent feature of the U.S. housing market.”
Redfin concludes that “One thing is for certain: a persistent shortage of homes for sale is yet another thing we can soon blame on millennials.”