According to estimates from the U.S. Census, by 2019, the millennial generation overtook Baby Boomers as the most populous generation. Numbering over 72 million people, it represented a larger group than Generation X at some 65 million, and had just squeaked past Baby Boomers, who numbered just over 71 million people.
On the flip side, when it comes to home ownership, millennials trail the older generations.
- Millennial Ownership was 47.9 percent in 2020
- Gen-X home home ownership rate was 69 percent,
- Baby Boomers and the Silent Generation came in at 77.8 percent
Home ownership has been diminishing with each successive generation.
Despite the stereotype that millennials don’t want to own a home or to be tied down, of those who plan to never purchase a home, 74 percent said affordability was the main reason.
The ability to make the leap to home ownership is a problem for the vast majority of millennials; 73 % are making the lifestyle choice to rent.
According to Forbes, seven out of ten millennials say that their living situation is hard or extremely hard to afford.
According to an annual report from Apartment List, the share of millennials that expect to rent forever has nearly doubled in two years, to nearly one-fifth. The high cost of renting is making it harder for people to save for a down payment large enough to make a mortgage affordable for them. In real terms, wages aren’t keeping up with everyday costs, and rising home prices are far outstripping wage increases. Nearly half of the millennials in age brackets approaching prime earning ages make less than $50,000 a year.
According to recent findings 73% of Millennials were unaware of low-down payment mortgage options that could potentially make homeownership more attainable. The findings also indicate that there is low awareness of alternative housing solutions. Only 39% were aware of manufactured homes as a more affordable housing option. On the bright side, the number of future homebuyers who are interested in manufactured homes increases by 31% after having been shown what the newest models look like.
What are Millennials looking for in a home?
Millennials are attracted to cities, whether for work, creative stimulation, or because they grew up in one. Six out of ten millennials currently reside in cities of at least half a million people, or in suburban towns close to big cities.
Millennials are buying homes later in life than previous generations and are doing away with many of the traditional home elements their parents desired. Trends among millennials include a desire for multifunctional and community spaces, and homes with modern, sustainable elements.
Millennials want to live close to work and things to do. You would think that urban areas would accommodate this request more than the suburbs, but this may not be 100% true. Those between ages 25 – 34 are less likely to live in urban areas.
According to Traditional Home Editor-in-Chief Jill Waage, “Seventy-five percent of millennials want relaxing outdoor spaces,” including amenities like vegetable gardens, decks and fences.
Millennial home buyers list large kitchens as one of their top priorities when buying a home and prefer open floor plans where the kitchen, dining and living areas are all connected over a formal dining room.
Millennials consider their home’s impact on the environment and their overall energy consumption.
Millennials interact with their homes in the same way they do with their smartphones. Some examples are automated security, heating, cooling and lights.
Millennials expect all things to be quick, efficient and long-lasting.
They do this both for social and practical reasons. When it comes to smaller homes and condos, having multifunctional spaces is a must.
It is worth considering that household formation, marriage, and child-rearing are all down. The impacts of these trends on future wealth could be long-lasting, as many younger adults will have less time to build housing wealth before they reach their retirement age.
Two challenges to be solved:
- Understanding and solving the barriers that have made accessing homeownership more difficult is vital to avoid the certain long-term consequences of the ownership decline.
- Future developers must address the design needs and wishes of the Millennial generation when planning developments.
The bottom line is that Millennials are the future of the housing market and they’re looking for something different than previous generations of home buyers and are struggling to make it happen.
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