Much has been written about the size and breadth of the world’s youngest consumers, the Millennials, but little has been written about the impact this massive demographic will have on the real estate market. With a size that rivals the Baby Boomers, Millennials make up 22% of the U.S. population and will most certainly play a role in country’s housing market—but when?
To get a sense of the impact that Millennials will have on the housing market, The Demand Institute recently surveyed more than 1,000 households headed by 18- to 29-year-olds to separate the fact from fiction about this massive demographic’s needs and wants when it comes to housing.
As the group that came of age during and since the Great Recession in the U.S., this generation has faced significant economic challenges. During the downturn, an unprecedented share of young adults sought relief in their parents’ homes rather than fighting harsh odds in the worst conditions since the Great Depression. With economic conditions improving, prospects are looking up and Millennials are starting to think about next steps—including homes of their own.
In looking ahead, the steps this generation is taking today will have a significant impact on the U.S. housing market and home-related purchasing. In the next five years, more than 8 million Millennial households will form. Millennials will spend $1.6 trillion on home purchases. They will also drop $600 billion on rent.
Even with many consumers still feeling glum about the economy, young consumers are overwhelmingly optimistic about their futures and eager to make names for themselves. Their eyes are the future and most plan to move within the next five years. And when it comes time to move, nearly 80% say they plan to improve their living situations.
In keeping with their optimistic perspectives, more than 80% already own or plan to own someday. Economic downturn notwithstanding, 75% say they believe ownership is an important long-term goal, and 73% believe homeownership is an excellent investment. Notably, only 16% say they don’t plan to buy a home. Based on the group’s stated aspirations, Millennials don’t appear any less likely than previous generations to own their own homes.
For more information and to download the Millennials and Their Homes report, click here.