When the Great Recession hit, young adults moved in with their parents, but six years into the economic downturn Millennials are poised to move out in droves, lifting the number of new households formed and possibly transforming the housing market, according to a new study by Harvard University’s Joint Center for Housing Studies.
In their annual “State of the Nation’s Housing” report, the Joint Center for Housing Studies suggested that participation in the housing market by Millennials — the segment of the population age 18 to 34 — is key to a robust housing recovery.
The study said the sheer size of the Millennial generation (86 million) makes them an especially influential force in the housing sector. The report projects that Millennials will create 24 million new households between 2015 and 2025, boosting demand for homes and rentals.
During the housing downturn, “some 2.1 million more adults in their 20s and 300,000 more adults in their 30s lived with their parents in 2013,” the study said.
More broadly, RealtyTrac will take a closer look at Millennials and the housing market in the July issue of the Housing News Report, where demographer Peter Francese analyzes the future impact of Millennials on home sales.
Here’s a short excerpt from Francese’s Millennial housing forecast:
“Despite their low rates of household formation there are now about 33 million Millennial households, and most of them are renters,” wrote Francese for the July issue of the Housing News Report. “In five years we conservatively project that there will be over 40 million Millennial households ages 25 to 44, and at least half of them will be homeowners.
Francese, the founder of American Demographics magazine, estimates that Millennials will kick-start the housing market in the next few years.
“That means Millennials are likely to be in the market for between 5 and 7 million homes in the next five years,” he writes. “A large fraction of them will probably be urban condominiums rather than suburban single family dwellings, but it still means a conversion of perhaps a million households a year from renters to homeowners.”