Why won’t homebuilders better serve Millennials?
It's a chicken-or-the-egg situation
Millennials are slow to enter the housing market, and there’s an extreme shortage of inventory in the housing market, anyway.
So which problem gets solved first?
An article in TIME by Denver Nicks highlighted the issue and said:
This is the first time in the supply history of housing where, for whatever reason, a giant new generation is not being served,” G.U. Krueger, a Los Angeles housing economist, told The Los Angeles Times. ”To me, it’s incomprehensible.”
To some degree, it’s a chicken-or-the-egg situation. Are builders not catering to first-time homebuyers because the nation’s young adults aren’t likely to be purchasing? Or are young adults unlikely to be buying partly because there are relatively few homes that match their needs?
Either way, both areas are finally expected to take off over the next few years.
The most recent homebuilder confidence report recorded that homebuilders exhibited some optimism for the coming months.
“Looking to 2016, at least a few public builders are opening or planning to open subdivisions in outlying communities and offering more affordable housing targeted to first-time buyers, including MDC, Meritage Homes and, especially, D.R. Horton,” Fitch stated.
However, the scene is set for a strong market, National Association of Home Builders’ Chief Economist David Crowe explained.
“The fundamentals are in place for continued growth of the housing market. Historically low mortgage rates, steady job gains, improved household formations and significant pent up demand all point to a gradual upward trend for housing in the year ahead,” Crowe said.
And out of 75.3 million Millennials, which range from 18 to 29 years old, 93% want to own a home in the near future.