A measure of how homeownership rates are influenced by several lifestyle, societal and economic factors questions whether rising demand from millennial homeowners will be met by supply.
The First American Homeownership Progress Index shows than nationally in 2017, potential homeownership demand increased 1.1% in 2017 compared with 2016, based on changes in the underlying lifestyle, societal and economic data.
“Millennials’ lifestyle and economic decisions are some of the main reasons we currently have a lower homeownership rate than expected, based on our HPRI,” said FirstAm’s chief economist Mark Fleming.
He noted that millennials are getting married later in life than previous generations and that often also means a delay in starting a family and so a delay in homeownership.
“We find that the decision to have children also influences the decision to own,” said Fleming. “Compared to households with no children, the homeownership rate is 5.4% higher for households with one or two children, and an additional percentage point higher for households with three or more children. Millennial lifestyle choices to delay marriage and children are part of the reason the homeownership rate is lower than we expect,” Fleming explained.
Homeownership rates expected to grow
Fleming added that it’s reasonable to expect homeownership rates to grow as millennials continue to make important decisions, including attaining an education and, later in life, getting married and buying a home.
“However, the question remains: as millions of millennials look to purchase their first homes, will the housing market provide enough homes for them?” he said.
The five states with the greatest year-over-year increase in potential homeownership demand are: Indiana (+2.6%), Oklahoma (+2.4%), Georgia (+2.4%), South Carolina (+2.2%) and Arizona (+1.9%).
The states with the greatest year-over-year decrease in potential homeownership demand are: Nebraska (-1.3%), Alaska (-0.8%), and Minnesota (-0.11%).
The full report is available at firstam.com
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