The housing market (the property ladder) has always required the movement of different generations to keep it going. First-time buyers buy the homes, then move-up buyers can move, then buyers moving to warmer climates or smaller maintenance-free homes. It takes all kinds of people to keep ladder working. In the last few years, the ladder rungs have been somewhat broken as buyers in each category have not all been buying and selling. However, an improving economy and a new crop of buyers will help keep the property ladder and the housing market strong in the next years to come.
Millennials are defined as the current generation of young people born just before the millennium. Although there is some dispute about the years of birth involved in this generation, there is no question about the impact they are having on everything. Just like the prior Baby-boomers, these millennials are changing the face of everything they touch. The way we communicate through social media and texting. The way we use computers and what we use them for. And especially the way they shop and spend their money. But mostly, the change they have made in their life milestones. Unlike prior generations, they are waiting longer to marry, have children and move out of their parent’s homes into their own homes. But as the oldest of this generation is just starting to move into their 30’s, their impact will start to move everyone up the housing ladder.
According to the United Nations Department of Economic Social Affairs in 2012, the number of Millennials (79 million) already outnumber Baby Boomers (76 million) in America by 3.94 percent. And a 2014 Joint Center for Housing Studies of Harvard University concludes that this generation by sheer volume of numbers is the key to the full recovery of the housing market. The study indicates that the number of households in their 30s should increase by 2.7 million over the coming decade, which should boost demand for new housing.
They are already out there and starting to impact housing, but in only a few years, the mass of their numbers will be in the market. This is good news for sellers of all kinds. More demand means pricing will go up and sellers can start moving out and up the property ladder to trigger all other sales. Starter homes first, then first and second move up homes and then maintenance-free homes here or elsewhere. It will also help exhaust the backlog of foreclosure properties which area still weighing down assessments and markets.
So sellers, start your engines. The Millennials are coming and they are going to want to buy your houses.