Are millennials warming to home ownership? Fannie Mae shares 'Insight'
WASHINGTON (12/31/15)--Fannie Mae economists took a good look at young-adult home ownership trends recently and created some projections that look fairly positive for the remainder of the decade.
In its latest edition of Housing Insights, Fannie's economic and strategic research group noted that resumed growth in young homeownerships could have several implications for the housing industry, including creating a need to adjust "the size, type, and geographic location of new housing construction; to expand education and counseling efforts targeted at inexperienced homeowners; and to step up efforts to provide services and technologies suitable for youthful home buyers."
The number of young homeowners has been in decline for decades due to multiple factors, which Fannie says include changes in the age distribution of the population, longer educational careers, delayed marriage and childbearing, and rising minority population shares.
In fact, with the exception of a growth spurt during the housing boom, home buying among the 25- to 34-year-old population has been pretty pokey with a big plummet during the housing bust and following Great Recession.
The Census Bureau’s American Community Survey indicated that the number of owner-occupants of that age group plummeted by an annual average of more than 300,000 between 2007 and 2012--counter to the strong population gains among young adults during this period, the economists noted.
The good news for housing trends, they said, is that if the young-adult population continues to grow rapidly, as expected, for the second half of this decade, it would "take only modest further improvements in homeownership rate trends for the number of young homeowners to return to growth."
"In fact," they predict, "even if the young-adult homeownership rate simply stabilizes at the current level, projected population growth would generate increases in the number of 25- to 34-year-old homeowners during the second half of the decade that exceed gains registered during the housing boom period of 2000 to 2005."
That resumed growth would have several housing market implications. For example:
- Gains in young owner-occupants could lead to increased demand for starter homes; and
- Growth in young owners also could increase demand for services and technologies that are designed to serve youthful home buyers as they search for housing and mortgages.