Millennials have been the largest demographic group since 2015, but they have not been pulling their weight in buying homes. And that’s put a big crimp on the housing recovery.
Both Zillow.com and Realtor.com, two online real estate powerhouses, are betting that next year those between ages 18 and 36 will start turning that around.
Realtor.com predicts that home prices will increase 3.9 percent over the next year, with sales of nearly 5.5 million homes. The site expects mortgage rates to reach 4.5 percent (from around 4 percent now).
Economic trends can’t undermine the demographics at play next year, though, which is why Smoke thinks the numbers will pan out. For one thing, huge swaths of the baby boom generation will be retiring and potentially looking to downsize. “Baby boomers for the last several years have been under-represented. But the older quarter are more involved now,” Smoke said.
Millennials have also been sitting out the housing market, but Realtor.com predicts they will soon make up 33 percent of the market, while boomers only make up 30 percent. And they will be particularly focused on buying in the Midwest.
Zillow is also rosy on the prospects of millennials buying more houses in 2017. A new report finds that half of all home buyers are under 36, as well as 56 percent of all first-time homebuyers.
While millennials have put off homebuying for a number of reasons – including massive student debt, low wages, high rents and low inventory of affordable homes – Zillow senior economist Skylar Olsen thinks they simply were not ready emotionally. But now the leading edge of the generation is hitting their mid-30s, and may finally be thinking about things like marriage, kids and mortgages.
“Homebuying doesn’t really become a dream of yours until you hit those major life events,” said Olsen.