The housing market has made notable strides in the last year, with prices rising appreciably and more consumers attempting to buy homes as a result of low interest rates, but some demographics appear to still be sitting on the sidelines.
Baby boomers and millennials have largely stayed out of the housing market despite all the steps forward it has taken, and this is likely due to significant financial difficulties they suffered during and following the recession. The Great Recession may have set them back in many of the major life plans other generations may have been able to tackle at their ages, according to a report from the National Association of Realtors. For instance, young people who were unable to find full-time employment or even lost the jobs they had during the recession likely saw their savings decline or their debts tick up, during that time, and as a result are now unable to meet down payment requirements their parents might have been able to achieve at the same age.
Meanwhile, baby boomers likely saw their retirement savings dwindle appreciably during this time, either as a result of their not being able to contribute as much to them, or because they were forced to dip into them, the report said. That, in turn, might lead many older workers who might have considered moving after they called it a career to either not do so or put off such a decision while they stayed in their jobs. As a consequence, these people are both not selling their homes and not buying new properties that are coming onto the market.
However, experts believe these trends likely won’t last for much longer given the improving market and economy, the report said.
“Homeownership rates have declined fastest for millennials, most likely the result of fewer job opportunities and higher student debt; however, I believe they still want to become owners and will eventually make their way into the housing market,” said Sturtevant. “When they do enter the market they’ll care about different things than previous generations too; I foresee more single people buying smaller homes in urban areas.
Housing affordability is expected to remain quite high for some time, as low interest rates will likely keep rising prices from pricing many consumers who would like to buy homes out of doing so.