Millennials Set to Become Largest Generation in 2019 - How Will This Impact Real Estate?
The National Mortgage Bankers Association, or NMBA, have predicted mortgage rates will continue to raise by at least half a percentage point in 2019, in the same time the US Census Bureau estimates that millenials (defined as people between the ages of 20 and 35) will overtake baby boomers as the nation's largest living adult generation.
Millennials, currently numbered at 71 million, see numbers surging in 2019 expecting to overtake the currently 72-73 million Baby Boomer population, while Gen X, those in between Millenials and Boomers, are forecast to pass Baby Boomers by 2028.
These shifts are expected to have some big implications for the housing market, where Millenials are already struggling. 9 out of 10 Millennials who currently rent say they intend to buy according to a new report from Apartment List, yet very few have any immediate plans to do so, just 4.9% say they will be able to do so within the next year, while 34% say they expect it to take at least 5 years.
Many factors, including the cost of college having risen by over 1000% since the 70's and Millenials average salaries disproportionately lower compared to the national average - even as much as 20% less than that of a Baby Boomer when they were the same age, meaning that while the Millennial generation is the most educated across the board, they are also saddled with the most student debt, pushing the reality of home ownership even further out of reach for most.
Saving enough for a downpayment is reported as the biggest financial hurdle most millenials looking at homeownership face. A staggering 48% of Millenials polled by Apartment List say they haven't been able to save anything toward a down payment.
A generation laden with student debt, stagnant wage growth, and rapid home price appreciation has made owning a house a much more long-term goal -- if it's possible at all -- than it was for previous generations.
In Portland, a city that's faced increasing house prices year on year for over a decade, it seems almost impossible for a Millenial to get on the property ladder, there is currently just a few neighborhoods within reach for households earning a median income of $85k according to the US Census bureau. A millenial would need to earn close to $150k / year to be able to afford some of Portland's more popular neighborhoods and that doesn't seem likely to happen any time soon.
Ettro Capital has been reporting on affordable housing for many years now, with several large projects already developed in areas desperately in need of housing - we're looking to continue to make use of raw or under utilized land to help ease the current housing crisis many cities face, while providing excellent returns for our investors. If you would like to learn more about what we do and how we do it, please don't hesitate to contact us.