Millennials Fuel a Housing-Market Turnaround
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How is the housing market performing during the pandemic?
Here's your money briefing for Thursday, August 27th. I'm J.R. Whalen for The Wall Street Journal. The housing industry has been a bright spot amid the pandemic. Sales rose almost 25% in July, and a big part of that growth is millennials. That's right, millennials. Long viewed as a generation of home renters who don't necessarily want to settle down.
You have this big demographic wave that is aging into their early 30s, and the expectation is those people are going to be buying homes in droves in the next couple of years.
Our housing reporter Nicole Friedman will explain what's prompting millennials to buy homes now and how long their buying ways are expected to last. That's after the break.
It's been a rough decade for millennials. The pandemic marks the second major recession they've endured.
Why are millennials suddenly buying homes after a decade of renting?
And while that's created economic challenges, at the moment, it's not getting in the way of them buying homes. Our housing reporter, Nicole Friedman, is here to discuss. So first of all, Nicole, millennials are not known for wanting to settle down. So what's drawing them to buy homes?
Well, I think many in the housing industry would say that that might be an outdated impression, that there was a concern after the Great Recession that millennials were not going to settle down, were not going to follow their predecessor generations in getting married and having kids and moving to the suburb and buying a home. But now a lot of economists and market watchers say that, in fact, they just delayed those activities, but that they are doing all of those same things that the earlier generations did, just maybe slightly later. It's a very well-educated generation, the millennials, and so many people changed. chose to finish college, even get a graduate degree, and then often due to student debt, they may have delayed some of those other lifestyle decisions as they built up savings or paid down debt.
But now millennials are getting married, are having kids, are buying homes.
So how much of this has to do with their age now?
So millennials are now the biggest living adult generation, so they outnumber the baby boomers. And they're typically considered to range from about mid-20s to late 30s.
How does millennial age and demographics drive current homebuying trends?
So what economists are seeing now is that older millennials who are in their mid to late 30s, that they are catching up a little, that they are starting to buy those first homes, have kids, get married, move out of the cities quickly. And so those activities are happening at a faster pace, even if it's a little later than earlier generations did at the same time. And then at the same time, you have younger millennials. Now, the biggest cohort of millennials was born in 1990. And so those are the people turning 30 this year, or maybe they just turned 30. And that has always been the prime home buying age. And so you have this big demographic wave that is aging into their early 30s. And the expectation is those people are going to be buying homes in droves in the next couple of years.
And how much did they contribute to home sales in July?
So the latest data we have is from the National Association of Realtors, and it's as of last July. And so in the year ending in last July, millennials made up about 38% of homebuyers, and that's up from 32% in 2015. So it's definitely a growing cohort. And when looking at just mortgages, the homebuyers that get mortgages, millennials made up more than 50% of the home purchase mortgages earlier in the year. So definitely it's a growing cohort. And that is, as I said, these demographic changes that they are aging into this prime home buying age.
Well, this can also mean great news for the broader economy.
Absolutely. Home sales can contribute a lot to the economy, and we are seeing huge home buying demand right now. Home sales in July of existing homes hit their highest annual rate since 2006, and so there's actually pretty stunning demand right now. And that is a combination of these demographic changes.
How much did millennials contribute to home sales and mortgage originations in July?
People are entering the stage in their life where they want to buy a home.
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Chapters
5 chapters
1
How is the housing market performing during the pandemic?
0:05–0:55
2
Why are millennials suddenly buying homes after a decade of renting?
0:55–2:16
3
How does millennial age and demographics drive current homebuying trends?
2:16–4:01
4
How much did millennials contribute to home sales and mortgage originations in July?
4:01–6:41
5
What pandemic-driven lifestyle changes are pushing millennials to seek more space?
6:41–7:26
Speakers
2 identifiedMore from WSJ Your Money Briefing
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