Millennials are feeling optimistic about buying a home this year, but they probably shouldn't be

• Nearly half of millennials are optimistic about buying a home this year, per a NerdWallet survey.
• They're more financially prepared than ever to buy, but the housing crisis still persists.

Millennials are feeling pretty good about their chances of becoming homeowners this year.

Nearly half (45%) are optimistic about buying a home in 2022, according to a new NerdWallet survey. That's more than any other generation, including Gen Z (35%), Gen X (24%), and baby boomers (31%). These millennials are also more hopeful than the majority of the 2,035 American adults polled, only 34% of whom said they feel better about their ability to buy a home in 2022 compared to 2021.

The optimism stems largely from their personal finances, as many respondents cited more savings and higher incomes as reasons for their positive sentiment. Yet with millennials feeling more financially prepared than ever to buy a home, they still might end up sorely disappointed: the housing crisis that boxed many first-time homeowners out of the market last year still persists.

Millennials spent years piecing together enough savings for a down payment on a home, finally ready to buy come 2021 as they made strides in building wealth and as interest rates hit historic lows. But the pandemic, a lumber shortage, and an undersupply of homes since the Great Recession — exacerbated by hot demand in a remote work era — created the perfect storm.

The generation found itself in the midst of its second housing crisis before age 40, as first-time homebuyers faced a severe shortage of starter homes and record-high prices for homes that were available. Daryl Fairweather, the chief economist at Redfin, previously told Insider there just weren't enough homes for millennials — America's largest generation — to buy.

Enter 2022, and demand is still outpacing supply. Around 26 million Americans said in the survey they plan to buy a home within the next 12 months. But as NerdWallet points out, only five to six million homes were sold in each of the past five years.

Dana Peterson, chief economist at non-profit The Conference Board, wrote in an October article for Barron's that we've only seen the beginning of millennial housing demand. The frenzy, she said, will continue thanks to rising incomes, remote work, and a robust economy.

"The sheer size of the millennial population, and the fact that they are just entering peak years for starting families and earning money, means that demand for housing has room to run," Peterson previously told Insider.

While there has been an uptick in new home builds since late last year, most are on the higher end of the market. National Association of Realtors' director of housing and commercial research Gay Cororaton previously told Insider that means affordability "remains a big issue."

Now, price growth in the US housing market and the larger economy may moderate in 2022. But as Insider's Alcynna Lloyd recently reported, that doesn't mean housing will get more affordable. Fannie Mae forecasted that regulators would shift their focus toward easing inflation, which would result in more expensive mortgages. And housing prices would still outpace wage growth.

"We expect the narrative around housing this year to shift from one of extremely limited inventories leading to hypercompetitive bidding wars to one in which increasingly more would-be homebuyers are priced out of the market," Fannie Mae researchers wrote. "We expect that rapid house price growth eclipsing gains in wages, combined with the waning effects of past stimulus checks and built-up savings, will make it increasingly difficult for many potential buyers."

Many millennials with enough money saved and a bit of luck will still be able to become homeowners for the first time. But for many of their peers, homeownership will still remain an unattainable dream.