The Proof Is IN – Housing Demand Will Continue to be Strong
Whether you want to sell to Millennials or not, maybe they are in your circle, or maybe they drive you crazy … it does not matter. The younger Millennials are driving the market and ensuring you and I stay busy for at least the next 4 years. Why? Birthrates don’t lie; housing demand will continue to be strong.
The median age of a first time home buyer is 33 years old per Freddie Mac, and they earn $89,000 in median income nationwide. Millennials make up 67% of the first-time home buyers…that’s HUGE! Especially if you look at the chart above. The peak population today is 29 to 32 years old… wait what? Yep.. 29 to 32.. right on the cusp of that median first time home buyer age. Have many of them bought already? sure… not every 29 year old is waiting till they turn 33. But the numbers don’t lie and a lot more of them are coming over the next four years. I don’t know if you are a Game of Thrones fan. I typically wouldn’t be.. but I am .. I’m hooked. The millennials coming to purchase homes is like the scene in Season 5 when the nightwalkers are coming over the hill into the wildlings camp by the thousands. It’s a demand that is coming and interest rates going up to 4% is not going to stop it. (see forecast below)
Nearly 22% of Americans are millennials. At 71.2 million population count, millennials surpassed baby boomers as the largest adult demographic in 2019. In 2019, more than half of millennials were still in their 20’s… 36.4M of them.
They are also earning more and are more educated then their Generation X and Baby Boomer siblings and parents. 40% of millennials have a bachelor’s degree or higher, compared with just 29% of Gen Xers and 28% of Baby Boomers when they were the same age. Here in Colorado, we are leading the Midwest with 43% of our millennials having advanced degrees. Nationwide, only 33% of Millennials have a high school or less education compared to 42% of Gen Xers and 54% of Baby Boomers.
This increased level of education over prior generations is leading to better paying jobs, giving Millennials the edge on higher median incomes. They also have a higher female labor-force participation rate and higher female wages.. I might be a Gen Xer.. but this stat makes me extremely proud as I raise a strong female Gen Z’er.
Millennials are also 51% of all home mortgage purchase applications (first time and move up). Denver is #11 for the highest Millennial home purchase app share… 58% of our home buyers are Millennials. 58% .. let that sink in. WOW. This is up 11% from 2019 due to their ability to work from anywhere, want the Colorado lifestyle, and with 5% of our jobs being high-tech.. we are attractive. Pretty in fact. The cool number in the chart that I saw.. 8% of the apps are from Gen Z, the oldest of which is 22..INCREDIBLE!
The Forecast for Your Business is UP!
MBA published their 2022/2023 forecast this month with an incredibly strong outlook for buyer demand on housing. New builds which will end 2021 down, due to limited supply and labor, will turn on the inventory increasing sales by an estimated 23% in 2022 and another 10.5% in 2023.
Existing home sales are also expected to rise by 6.7% in 2022 and another 2.5% in 2023 over a record breaking 2021 after breaking records in 2020.. breaking past record breaking years… ha! Refi’s on the other hand will tumble as interest rates rise from 3.1% to 4% and 4.3%. These rates are still historically low, so while they dampen refinances, they will not stop the desire of buyers. I expect we will see a population migration driven by affordability. Those who need to find less expensive housing will move away from Denver, while others will come in for high tech jobs and Colorado’s desirable lifestyle. Migration numbers are definitely one of the top 3 things I’ll be watching over the next 18 months.
Be The Expert
- The Millennial impact has just begun
- Age 33 is the peak first time homebuyer year
- Unsustainable appreciation will slow as inventory rises
- Demand will only increase as forecasted
- More buyers will come back as the market stabilizes
- Sellers will want to lock in equity
Bottom line.. facts matter! This is a wonderful market to be in!