Much has been said about Millennials regarding where they live, where they want to live, who they live with, whether they rent or own both now and in the future. Millennials are now the largest demographic cohort in the U.S., and their actions on whether they rent or own controls the long-term destiny of housing.
So naturally there is concern, given the latest household formation rates reported by the US Census Bureau. The National Association of Realtors® Economists’ Outlook Blog noted that the older Baby Boomers 65 to 74 years old topped the list in the number of household formations in the 12 months ending June 2015 at 860,000 new households. The younger Baby Boomers (aged 55 to 64) added the second most at 391,000 net new households, while those 75 and up grew 264,000. For the segment of Millennials aged 20 to 24, their net household formation rate was actually negative in the period, losing 85,000 new households. But the older Millennial group aged 25 to 34 created 159,000 new households.
These statistics, however, are not equal across the country. Realtor.com supplied Bloomberg BusinessWeek with a list of the top-10 cities for first-time homebuyers where Millennials made up the largest share of buyers using a mortgage to purchase a home. The first graphs shows the percent of Millennials and the second graph the corresponding median home price as of August 2015.
All but one of the cities – Provo, Utah – had median prices of less the $250,000. Not surprisingly, these buyers with little equity are making the most in highly affordable markets where there are jobs.
To read the entire Bloomberg article click http://www.bloomberg.com/news/articles/2015-09-28/the-cities-where-millennials-are-taking-over-the-housing-market
To read the Realtor blog click http://economistsoutlook.blogs.realtor.org/2015/09/25/baby-boomers-lead-recent-household-formation/
Given rising rents and still-highly affordable interest rates, expect this growth of first-time Millennial homebuyers to be a trend and not an outlying statistic.
This is just a glimpse of a major and growing trend.
Ted