It Looks Like Millennials Won’t Be Buying More Homes in 2018
A new report shows how 2017 will affect next year’s housing market.
Published Sep 28, 2018 7:05 PM
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How is 2017 going to affect the way we make housing decisions in 2018? According to this year’s “American Dream” Trulia report, a lot: In a just-released survey, the real estate resource examined consumer sentiment on housing for the year to come—and unfortunately, the prognosis isn’t all that positive.
“This year, many would-be homebuyers faced a worsening inventory situation, which meant more competition for fewer homes for sale and rising home prices,” Trulia Chief Economist Ralph McLaughlin tells us. “In addition, 2017 brought a slew of natural disasters to the US housing market; not only have these disasters drastically affected residents in these areas, but it turns out they also appeared to have affected the psyche of homeowners and homebuyers in other parts of the country.”
In a survey conducted in November 2017 polling 2,188 adults over 18 years old, Trulia examined how Americans were feeling about the housing market now to predict what may happen in the new year. For one, optimism about homebuying in 2018—due to both a turbulent political climate and a concern over natural disasters—is only at 25 percent. Another 25 percent believe the coming year will be worse, which McLaughlin says marks the first time in four years that the sentiment is neither overwhelmingly positive or negative. Only 10 percent of Americans surveyed said they planned to buy a home in the next year.
Conversely, Americans seem more enthusiastic about selling: 31 percent believe the upcoming year will be better for parting with their home, and only 14 percent think it will be worse. This 17-percentage point difference is the biggest it’s been since 2014.
“The shift is likely related to the same possible reasons that many Americans are thinking next year will be worse for homebuying,” explains McLaughlin. “Namely, that prices and political uncertainty may be enticing homeowners to cash in on their equity.”
Homebuying still doesn’t seem to be something particularly on the radar for millennials. The 18-34 demographic isn’t buying homes at the same rate of other generations, a fact attributed to finances. With student loan debt and a stagnant wage growth (not avocado toast), it’s hardly surprising that 66 percent of millennial renters say that saving up money is the primary reason they haven’t bought a home yet. Rising home prices are the secondary reason.
According to McLaughlin, these findings are consistent with last year’s report.
“In 2016, we asked millennials what would make them take the leap from renting to homeownership and we found that saving money is continually a primary factor,” he says. “Perhaps as a result, most millennials who plan to buy a home one day don’t plan to do so after 2020.”
If they do, they should probably be looking at homes in West Virginia and Ohio, named the cheapest states for millennial homebuyers. They may even be able to break into the coastal real estate markets that are currently expensive with low inventory—per Trulia, the rising optimism about selling a home should increase inventory, while the declining enthusiasm about buying a home should make competition (and maybe even prices) lower.
In more positive news, while 2017 has come with its fair share of problems, thereby creating a climate that’s unstable in more ways than one, the American Dream is still very much wrapped up in owning a home: 73 percent of millennials said that homeownership is part of their personal American Dream—they just might have to wait a while.
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