This is a follow up article to our October 28th article title, “The Sleeping Millennial Giant has Awakened.”
With ranks reaching 72 million strong, millennials are reaching peak age for homeownership. This generation has struggled to enter the housing market thanks to the fallout of the Great Recession and a mountain of student debt. But this Sleeping Giant has awoken, fueled by the work from home trend. And even if just 10% of millennials enter the home buying market – that’s 7 million people – that’s more than the number of homes sold in all of 2020 to ALL demographics.
Here are some fascinating, quick notes on the next wave of home buyers: Millennials…
- The share of millennials purchasing homes was on the rise between 2015 and 2019. The pandemic supercharged this trend, surging for those under 44 years of age in 2020, mostly due to super low mortgage rates.
- Millennials (26-41 years old and 22% of the US population) are working and reducing debt.
- There are roughly 72.8 million of them in the US.
- They also account for about 36% of the workforce.
- They are accumulating savings to pay down student loans and other obligations, a pivotal hurdle to homeownership.
- The Education Data Initiative estimates that while the youngest millennials have $22,953, on average, in student-loan debt, those in their early 30s have only $874, and those in their early 40s have largely paid off their debt.
- From November 2020 to April 2021, 3,458 applicants received loan discharges from the Public Service Loan Forgiveness program with total student loan forgiveness at $583 million.
- 95,000 applications were approved under the borrower-defense program, over its length, with close to $600 million discharged.
- They received more than $380 million in federal stimulus, starting in March 2020. 49% of the money was used for goods and services, 33% for paying down debt.
- 18% was used for savings and investments, probably including homes.
- The median net worth of millennials was $91,300 in 2019, compared with $64,600 in 2016…..up 40%
- The pandemic further fueled their wealth via stimulus checks.
- Many recently discovered investing. The median age of people who began investing during the pandemic was 35, compared with 48 for those who began doing so pre pandemic.
- Millennials make up 51% of new pandemic-era investors. (Schwab)
- Millennials are forming households, marrying, and having children, all of which requires space.
- The number of households headed by adults 30-to-44 years old jumped by 1.3 million during the pandemic.
- Married couples 31 to 40 were more likely than any other age group to purchase homes. (NAR, 2021 survey)
- The largest group of unmarried couples who purchased homes were adults aged 22 – 30.
- Millennials 31-to-40 years old were the most likely (61%) to have at least one child under 18 at home.
- Millennials accounted for the largest share of home buyers (37%) over the past year.
- Millennials are approaching peak earning years—ages 45 – 54—a critical time for financing a home.
- Their median annual income was $77,800 in 2019, suggesting that millennials have the earning power necessary for homeownership.
- Over the next two decades, 25% of the U.S. population is going to reach peak earning years, fueling continued housing demand—especially for inexpensive starter homes.
- An April 2021 YPulse study revealed that 55% of millennials want to work from home post pandemic.
- An NAR study revealed that millennials were the most likely to say that the reason for owning a home was to have a space of their own or for a larger abode—62% of 22-to-30-year-olds and 54% of 31-to-40-year-olds.
- As work from home is probably here to stay, millennial housing demand has room to run.
The demand from this important consumer group is likely to persist for several years….and homeownership is still central to them achieving the American Dream.
The Dinsmore Group would like to give content and writing credit to Leonard Steinberg @theleonardsteinbergteam. He shares his valuable insights through his wonderful Compass wide journal, Compass Contemplations. Mr. Steinberg holds the esteemed title of Chief Evangelist at Compass.