Gen Zers are more likely to become homeowners than millennials, according to some experts
- Gen Zers are more likely to become homeowners than millennials, according to one-third of experts surveyed in a new Zillow report.
- They think the homeownership rate - which has fallen for millennials - will rebound in the next 15 years for several reasons, including a increased desire for homeownership as well as a less constrained home supply.
- Millennials are set to fuel the housing market in 2020, according to a Realtor.com report, but they're facing a big problem: a shortage of starter homes.
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Millennials got the short end of the stick when it comes to the housing market.
Not only are they less likely to own a home than previous generations, they're also less likely to become homeowners than the generation after them - Gen Zers.
That's according to several experts in a new Zillow report. The report surveyed more than 100 economists, analysts, and real-estate experts; while this pool is small, it represents a niche industry rather than the general population. More than one-third (38%) said they expect homeownership rates among those in the 35- to 44-year-old age range to increase in the next 15 years (when the oldest Gen Z members turn 40).
The homeownership rate for this current age group (currently defined by Pew as older millennials and younger Gen X) has decreased from 66% to 60% in the past 10 years, according to the report. Twenty percent of experts think this rate will stay the same in 2035, while 31% think it will decrease.
Those who think Gen Zers are more likely to become homeowners relate the anticipated homeownership rate increase to five factors, according to the report: an increased preference to own; fewer student loan burdens; a greater appeal in low cost of living cities; more homeownership-friendly policies, and a less constrained home supply.
Millennials are facing a starter home shortage
Millennials have been delaying homeownership as they grapple with student-loan debt and play financial catch up from the recession.
It doesn't help that home prices have skyrocketed. First-time homebuyers now will pay 39% more than first-time homebuyers did nearly 40 years ago, according to Student Loan Hero. And only 13% of millennial renters across the US will be able to afford a traditional 20% down payment within the next five years, a recent Apartment List survey found.
As millennials enter their prime homebuying years, they're set to finally fuel the 2020 housing market thanks to low interest and mortgage rates as well as a flattened home price growth rate, according to a recent Realtor.com report. But there could be one major problem, wrote Mareesa Nicosia for Mansion Global: There's a shortage of entry-level homes.
Most newly constructed homes in 2019 were mostly devoted to "upper-tier housing," defined as those costing at least $500,000, according to the report. And many of the lower-priced starter homes that are available are being bought up by real-estate investors with all-cash offers.
A starter home scarcity is making it even harder for cash-strapped millennials to attain homeownership.
