Millennials Are Were Buying Homes The impact of coronavirus on real estate t was finally happening. The nation’s homeownership rate was beginning to rise. From a postGreat Recession low of 63.4 percent in 2016, the rate had climbed to 64.6 percent in 2019. It doesn’t sound like much of an increase, but behind the upward trend was growing homeownership among younger adults—the nation’s first-time homebuyers, the fuel of the housing market. First-time buyers allow middle-aged homeowners to move to bigger and better homes, and middle-aged buyers allow older homeowners to sell their manses and downsize as the nest empties. The homeownership rate of householders in their 30s had grown by 2 to 3 percentage points between 2016 and 2019. Realtors were breathing a sigh of relief. Happy days were here again. You know what happened next. Coronavirus. Not only is coronavirus threatening to halt the long-awaited recovery from the Great Recession’s housing market crisis, but it may reverse the trend of rising homeownership rates altogether. It will take some time before we can determine how bad it will get, but the results from a National Association of Realtors’ survey offer some clues. The NAR fielded the survey of its members on April 19-20 to measure the early impact of coronavirus on the real estate market. The impact appears to be big. Only 10 percent of respondents to the NAR survey said coronavirus had no impact on their clients’ attitudes toward buying a home. A plurality of the respondents (44 percent) reported that their clients had decided to delay the homebuying process by a couple of months. Another 22 percent said their clients had stopped
looking for a home because of job loss, and 7 percent said their clients had dropped out of the housing market altogether. Two out of three homebuyers were expecting home prices to be lower because of the pandemic, but only 26 percent of home sellers had reduced their prices. Younger adults are the ones most affected by job loss due to the pandemic. As of the last full week of April, 55 percent of people under age 45 said they or someone in their household had been let go or had their work hours reduced because of coronavirus, according to an NPR/PBS NewsHour/Marist Poll. This is particularly bad news for the real estate market because millennials, defined by the National Association of Realtors as those aged 22 to 39, are the largest share of the nation’s homebuyers. In the 12 months from July 2018 through June 2019, the millennial generation accounted for 38 percent of homebuyers, the NAR reports in 2020 Home Buyers and Sellers Generational Trends. Baby-boomers are another 33 percent of buyers, and Gen Xers are 23 percent. Among the millennials who bought a home during the year, most were first-time buyers. The economic woes hitting all Americans, but especially younger adults, coupled with the importance of first-time homebuyers to a healthy housing market will dampen not just the homeownership rate but also housing values. The public already feels it. The percentage who think it is a good time to buy has fallen to the lowest level ever recorded by Gallup. Just 50 percent think it is a good time for homebuying. That’s two percentage points below the previous record low set in 2006—just before the housing market collapsed.
Distribution of home buyers by generation, July 2018 through June 2019
Millennials:
38%
Gen Xers:
23%
Boomers:
33%
Older Americans: 6% Source: National Association of Realtors, 2020 Home Buyers and Sellers Generational Trends Report
AMERICANDEMOGRAPHICS.COM I MAY 2020
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