Surprise Uptick in Homeownership for Millennials What Does It Mean?
Experts disagree on whether the recent increase in millennial homeownership is a trend or a fluke.
According to traditional wisdom, millennials are not inclined to be homeowners. They’re burdened with outrageous student loan debt, they’ve struggled to build careers in very trying economic times, and they’ve seen older generations get burned by the subprime mortgage crisis and the bursting of various housing bubbles.
So, unlike previous generations, in which about half of individuals ventured into homeownership between ages 30 and 34, today’s 30 to 34 year olds have continued to rent or live with their families. This trend began in 2007, and by 2011 the rate of homeownership among the millennial generation had dipped below 50 percent for the first time in memory. It’s been stuck there ever since.
Needless to say, having an entire generation essentially opt out of homeownership has been bad news for the construction and lending industries.
However, in the most recent data, a glimmer of hope has appeared: homeownership actually increased among millennials in the third quarter of 2015. True, the increase was small—a mere 1.6 percent—but it has definitely caused a stir.
Now the question is…
What does it mean?
The field is split between those experts who see this small uptick as a sign that we’ve finally hit bottom and are now poised for an upward trend, and those who see it as nothing more than an insignificant statistical wobble.
The naysayers point to a similar uptick that happened at the tail end of 2014, which was followed by record lows in the first half of 2015, as evidence that we shouldn’t get our hopes up.
But others reason that the trend is here to stay, because we have finally managed to gather a perfect storm of factors necessary to engage millennials in the housing market: plunging unemployment rates, dirt cheap mortgages, reasonable home prices, and rapidly rising rent costs.
The experts at BUILDER magazine are among the optimists, believing that the small increase in demand for homeownership among the 77 million millennials will continue to grow until eventually this generation will match the homeownership rate of roughly 65 percent seen in older generations.
At ECL Software, we agree with this outlook. We’ve been working hard to get our Fund Control software into the hands of banks like you, so you can maximize this opportunity with streamlined operations, reduced costs, and improved efficiency.
For a free personalized online demo, please call or email us today.
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