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The Awakening of Millennial Homeownership Demand
Monday, December 4, 2017 6:40 AM

New research from the University of Southern California and Fannie Mae

The Millennial generation clocks in at around 88 million members, and it now fills the 25-34 age range that traditionally accounts for the most first-time homebuyers. Despite their impressive numbers, Millennials' impact on the housing market has been muted due to a lower likelihood of buying homes than prior generations.

The Great Recession undoubtedly slowed young adults' initial ascent into homeownership. Now, with the economy in recovery mode for nearly a decade, are Millennials beginning to increase their attainment of homeownership?

In a new study, researchers from the University of Southern California and Fannie Mae use two different approaches to analyze recent data from the Census Bureau's American Community Survey (ACS). They find that comparing a traditional age-group analysis with an alternative cohort analysis yields dramatically different views on the state of Millennial homeownership.

Key findings:

  • Age-group analysis of the data suggests that Millennial homeownership demand continues to slumber:
    • This perspective, which focuses on cumulative homeownership attainment as of a given age, reveals no rebound in young-adult homeownership rates despite years of economic recovery.
  • However, a cohort perspective, which disentangles current from past home-buying behaviors, reveals a sharp awakening of Millennial homeownership:
    • Cohort analysis shows that the pace of young-adult home purchases accelerated substantially during the economic recovery and quickened further through 2016.
    • For every age transition above 22-23 -> 24-25, the increases in cohort homeownership rate between 2014-2016 were significantly greater than the gains registered from either 2008-2010 or 2010-2012.

Compared with the age-group approach, the cohort perspective suggests a more optimistic outlook for Millennial homeownership demand and casts doubt on the notion that young adults have diminished preferences for buying homes.