October 04, 2019
How Inventory May Affect Growing Millennial Homebuyer Interest
The Millennial generation, projected to surpass Boomers as the largest living generation in the coming year, is also expected to continue entering the housing market at rising rates. According to an April report by Zillow, around 45 million Millennials are set to enter the typical prime age for purchasing a first home—about 34 years old—within the coming decade. That’s 3.1 million more Millennials than intended to buy homes during the decade previous.
Meanwhile, the inventory of single-family housing continues to remain fairly stagnant. For various reasons—including recent tariffs on building materials and slimmed-capacity labor force in the wake of the so-called Great Recession—construction of single family housing has fallen well behind the demand of the incoming generation of buyers. (And yet some continue to bemoan the idea that Millennials are not buying houses at the rate their forebears did at the same age—which we, too, have pointed out previously.) The lower inventory, which is further slimmed by investment flipping, creates higher prices, excluding even more starter-home buyers from the market. The report indicates that buyers need to save 1.5 times longer now to save for a down payment than they had to three decades ago.
This, in turn, according to Zillow’s Director of Research Skylar Olsen, “suggests that the typical age of first-time buyers will continue to be pushed further and further out.” Olson continued, “The rate of single-family construction is still behind the pace we experienced in the 1990s, and without an increase in truly new supply, would-be first-time buyers will instead persist in the rental market.”
The rental market is eased when people make the transition from renting to owning—so the tight market for starter homes also translates into higher rental occupancy and higher prices in that market. Which, in turn, may result in higher levels of mixed-generation homes, which causes cramped living for some, and also potentially a rise in levels of homelessness.
But all is not lost. If you are looking to buy a home in Rhode Island, Massachusetts, or Florida, we at Topouzis & Associates, P.C. perform title searches to confirm (or refute) claims of deed and title, and to fix any defects if possible. We do things by the book, but think outside the box to ensure every element of the title conveyed is free and clear of any unanticipated problems.