Millennials haven’t taken over the housing market yet, but it’s only a matter of time before they do.
Many Millennials have not moved into homeownership due to a number of factors, including a preference for urban living and a high student debt burden.
However, now first First American created a chart that shows Millennials have a higher percentage of people with a college degree than any other generation.
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(Source: First American)
This educational advantage bodes well for future homeownership rates among this generation. A study from Fannie Mae showed that the long-term benefit of a college degree outweighs the short-term burden of student loan debt when it comes to the likelihood of eventual homeownership.
The study showed that those who earned a degree without taking on student debt are the most likely to become homeowners, followed by those who graduated with debt, those who never went to college and lastly, those who took on student debt but never graduated.
So Millennials' status as not only the largest demographic but also the most educated generation ever could soon lead to abnormally high homeownership rates. That could come with a downside, however.
“The risk will be that prices will adjust to all of the demand and reduce affordability, making it more difficult,” First American Financial Corp. Chief Economist Mark Fleming told HousingWire.
“That’s why the issue of lack of inventory, whether in the form of less existing home sales than expected or a lack of right-priced new homes, is so important to the future success of the market to serve the possible tsunami of demand,” Fleming said.
Freddie Mac also thinks an influx in Millennial buyers is likely, and there is evidence this could already be starting. Existing home sales increased in September, driven mainly by a dramatic increase in first-time homebuyers, which reached the highest share of homebuyers in four years, according to a report from the National Association of Realtors.