Highlighting data from the Joint Center for Housing Studies of Harvard University and the U.S. Census Bureau’s Housing Vacancy Survey, Frank Nothaft of CoreLogic reports on the powerful effects that both millennials and baby boomers will have on U.S. housing market demand over the next decade.
Demographic forces will power housing demand in coming years as the millennial cohorts come into prime ages for forming households and buying first or second homes. The housing market has begun to feel the effects of this trend and the aging of the second largest cohort – the baby boomers.
Census Bureau data shows that during 2014, the largest single-age group of younger Americans was 23, with ages 22 and 24 right behind them, all clustered in the 4.5 million range. The average age for a first-time homebuyer is 31. So in six to eight years, this bulge will become prime candidates for home sales and mortgages.
But that’s not the only demographic driver at work. The average age of a “move-up” or “repeat” homebuyer is 39. Right now there are about 3.9 million people in this age group. Eight years from now, there will be 4.2 million potential repeat candidates in the sweet spot. There may even be a third wave, as the largest cohorts of baby boomers (those born in 1956 through 1958) hit retirement age and start looking for retirement homes, second homes, or empty-nest condos.
Millennials’ high student debt ratios and antipathy to buying homes is the stuff of legend. But that is likely to change as they advance in their working careers and plan families. Surveys of millennials indicate that they have a similar desire for homeownership as their parents’ cohort, but recognize that they plan to transition into ownership at a later age. Six to eight years from now, it’s a good bet they will look more like the home-buying cohorts of the past.
