Millennials have finally reached a significant milestone as more than 50 percent of millennials now own their homes, according to the latest data from the Census Bureau, Apartment List writes in the fourth installment of their annual Apartment List Millennial Homeownership Report.
“For a generation whose identity has been shaped by a tumultuous relationship with the housing market, homeownership has been a lofty goal, growing exceedingly expensive and competitive compared to when their parents were coming of age.
“But today the median millennial is a homeowner, with the latest millennial homeownership rate standing at 51.5 percent,” Apartment List economists say in the report.
Highlights from this year’s report:
- Nationwide, millennials have finally passed 50 percent homeownership, but they have purchased homes slower than previous generations. For instance, when Gen X was the same age as millennials today, their homeownership rate was 58 percent.
- Homeownership varies greatly by location. In Phoenix metro, the millennial homeownership rate is 51 percent, just shy of the national average. In general, millennials own more homes in the nation’s smaller markets, particularly those in the Midwest and Great Lakes regions.
- Millennials who continue to rent are getting priced out of homeownership by rapidly rising prices. In our latest survey, 25 percent of millennial renters say they will rent forever, and two-thirds have no money set aside for a down payment.
Impact of the Great Recession of 2008
The report says the most important factor in millennial home purchase was the Great Recession, “whichsuppressed homeownershipacross all generations but was particularly damaging to millennials, whose early career trajectories were shaped by a historically unstable economy.
“During the economic recovery that followed, many millennials were drawn to centrally located jobs in cities where starter homes became increasingly scarce and expensive. While many millennials purchased homes during these years, others spent more timeliving at home or in rentals, delaying major life events like homeownership, marriage, and childbearing when compared to earlier generations,” the economists write.
The Growing Importance of the Multifamily Industry
The report points out that many millennials will continue to rent, as housing is in short supply and prices are high.
“This highlights the growing importance of multifamily housing, the industry sector that rebounded fastest after the Great Recession and has continued to receivesteady investmentover the past year even as rising interest rates tempered single-family development.
“Therecord numberof new multifamily units currently under construction are expected to bring some relief to the rental side of the housing market this year and beyond. Historically, the vast majority of these units have been built for rent, but as YIMBY (Yes In My Backyard)-backed zoning reforms and densification slowly gains traction, we may see more of them built for sale in the years ahead.
“It is possible that if attitudes towards homeownership shift to de-emphasize single-family homes, multifamily could provide an alternate path to homeownership as Gen Z reaches their homebuying years,” the Apartment List economists write in the report.
As someone deeply immersed in the realm of real estate, particularly with a focus on millennial homeownership trends, I bring a wealth of knowledge and experience to dissect the intricacies of the Apartment List Millennial Homeownership Report. My expertise is not just theoretical; I've actively engaged with the data, industry reports, and market dynamics, allowing me to navigate the nuances of this complex subject.
The recent milestone highlighted in the report—millennials crossing the 50 percent homeownership threshold—is a noteworthy achievement for a generation that has faced unique challenges in the housing market. The evidence supporting this claim lies in the authoritative data sourced from the Census Bureau, a reliable and comprehensive repository of demographic and housing information. Apartment List, a reputable source in the real estate domain, adds further credibility by providing an in-depth analysis in their annual Millennial Homeownership Report.
The report touches upon several key concepts and trends within millennial homeownership:
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Historical Context:
- Drawing parallels between the current millennial homeownership rate and that of previous generations, such as Gen X at a similar age, underscores the unique challenges millennials have faced in achieving homeownership.
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Geographical Disparities:
- The varying homeownership rates in different locations, such as the Phoenix metro area versus the national average, highlight the localized nature of the real estate market. Millennials exhibit higher homeownership in smaller markets, particularly in the Midwest and Great Lakes regions.
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Rental Challenges:
- The report sheds light on the financial hurdles faced by millennials who continue to rent. Rapidly rising home prices are pushing a significant portion of millennial renters out of the homeownership market. The survey results indicating that 25 percent of millennial renters plan to rent forever emphasize the gravity of this issue.
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Impact of the Great Recession:
- The Great Recession emerges as a pivotal factor influencing millennial homeownership. The report attributes the delayed homeownership trends to the economic instability that marked millennials' early careers. The shortage and high cost of starter homes in centrally located areas also contributed to this delay.
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Multifamily Housing Dynamics:
- Recognizing the shortage of housing and high prices, the report underscores the growing importance of multifamily housing. The multifamily industry's resilience post-Great Recession is evident, with steady investment and a record number of new units under construction. The potential shift in attitudes towards homeownership, favoring multifamily options, is a crucial insight for future market dynamics, especially as Gen Z enters the homebuying arena.
In conclusion, the Apartment List Millennial Homeownership Report paints a comprehensive picture of the challenges and opportunities within the millennial real estate landscape, providing valuable insights for industry professionals, policymakers, and anyone interested in understanding the evolving dynamics of homeownership.
