Monitoring demographic shifts is a critical part of any business practice, and as such, my company, CONTI Capital, has kept close tabs on the remarkable impact the millennial generation has had on housing demand.
The U.S. now finds itself with a huge swell of housing demand and not enough supply, and part of this demand is due to the millennial generation. As they begin to form families and move up in their careers, this large slice of the population is facing high housing prices and rising interest rates. While these factors may be pressing downward on home sales, it is my view that the need for housing still holds strong.
Who are millennials?
As of April 2020, there were more than 72 million millennials in the U.S., making the group larger than Gen-X and the Baby Boomer generation.
One cannot assume that this generation will affect business in the same way as past generations. Millennials often differ from their elders in their approach to major life milestones. For example, they tend to get married later in life than previous generations. In 2014, 28% of millennials were married when they were between ages 18 and 33, compared with 38% of Gen Xers and 49% of Baby Boomers when they were in that age range. Similarly, millennials tend to have children later in life.
The number of millennials is enough to fuel a large part of housing demand, according to my company’s analysis. New households increased by 1.6 million between the first quarter of 2020 and the first quarter of 2022, according to Harvard University’s Joint Center for Housing Studies. Many of those households are millennials who delayed living on their own in their 20s and early 30s.
Many millennials are looking to spread out into the suburbs, wanting the increased space that comes with a detached home and access to quality schools. However, the obstacles for hopeful first-time homebuyers are high, both financially and from a supply perspective.
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