Millennials, down on their housing luck, will be outdone by Gen Z
Pity the poor Millennials as they begin turning 40 in 2020. Their housing luck hasn’t been good. Gen Z-ers, still in their early 20s, will have a much better fate when they enter their peak homebuying years, Zillow said in a report on Monday.
Most Millennials graduated from college during the Great Recession with a record level of student debt, after parents hit with job losses were forced to pull back tuition support. When the generation born from 1981 to 1996 began getting on its feet a few years later and began looking for homes to buy, it got hit with another problem. Property prices were skyrocketing and the inventory of homes was tightening as construction, hard-hit during the downturn and still on the sidelines, lagged population growth.
There’s also the distaste factor: Millennials saw their parents stressed out as the value of homes tumbled in the real estate crash. Some were among the 9 million families who lost homes to foreclosure as skyrocketing job losses led to mortgage delinquencies. As a result, the idea of homeownership lost some of its luster.
Census data shows the results: The homeownership rate for people aged 35 to 44 fell to 60% in the third quarter, down from 67% a decade earlier.
In 15 years, when Gen Zers begin entering their prime homebuying years, they’ll have an easier go of it, Zillow said in a report based on a survey of economists and real estate experts.
Almost half of the respondents in the Zillow survey said they expect homeownership rates to be higher in 2035 – when Gen Zers begin turning 40 – in the 35- to 44-year-old category.
Among the reasons they cite: the supply of homes will be less constrained, the preference to own versus renting will be higher, student loan burdens will ease, and more people will be open to moving to areas of the country where homes are cheaper.
“In 2020, the oldest millennials will begin turning 40, capping a turbulent decade that presented any number of home buying difficulties for them at the same time as they aged into their prime home-buying years and severely denting the homeownership rate among 35-to-44 year-olds,” the report said.
“By 2035, when the younger Gen Z begins reaching the same age, experts said they largely expect conditions to be more favorable and for the homeownership rate among 35- to-44-year-olds to be higher than it is today,” it said.