The incoming increase of millennial homebuyers is going to be a huge opportunity for the United States housing market.
Sheryl Palmer, the CEO of Taylor Morrison Home, predicts a major opportunity for the U.S housing market over the next decade. The millennial generation is accelerating towards prime home-buying age.
According to a recent analysis by Zillow, nearly 45 million Americans will reach the general age of first-time home buyers in the next 10 years. This is 3.1 million more than in the last 10 years.
The only catch is that it is becoming harder for millennials to buy these homes. Homeownership rate of millennials is down around 8% from previous generations at this age. This is due to delays in marriage, increasing student loan debt, and higher urban living prices. It does not help that over the last five years, prices for a starter home has increased by almost 60% while inventory is down 23%.
The homebuyers are here, but the houses are not. We need to find a way to build new homes at the right price. The CEO of Freddie Mac, David M. Brickman, claims there needs to be a higher supply of new homes at lower price points. Brickman states “We need about 1.5 million homes each year, and we’re barely at 1.2 million. We’ve been running at that level, we’ve got a deficit of 4 million houses, which drives rents up and creates tension.”
This younger generation is having more trouble affording a home at the same age that their parents once did. According to Zillow, over one in five, or 22% of millennials are staying home or returning to their childhood home.