Millennials are people that are born between 1981 and 1996 and they are the largest generation we have ever had in America. It is estimated that they have caused 60% of the growth in the housing market as they are coming into home buying age. With the amount of millennials reaching the buying age contractors will have to produce 2 million houses each year to satisfy the expected demand, where in 2021 they only built about 1.6 million homes.
This is not only a result of millennials becoming of buying age, the pandemic has also had a huge influence on this. They are wanting to get into bigger spaces (out of apartments and into homes) because they want more space, especially for remote work. In 2021, this caused a large majority of young buyers to buy single family homes over apartments.
The question is will this high demand for home last for millennials? Interest rates are rising and have high potential to raise more throughout the year. This is similar to baby boomers in the 1980s, when interest rates increase they had reached their peak in home sales as well. Additionally, with unavailability of raw materials home construction may not be able to keep up with the current demand.
https://www.economist.com/finance-and-economics/2022/03/26/millennial-demand-helps-stoke-the-housing-boom
I like how you included the need for space due to remote jobs. The pandemic made it so everyone is not accountable to be able to work online. High schoolers don't even have snow days anymore! My sister currently has an apartment and is working remotely and has talked about the want for more space. I can see this being a common issue.
ReplyDeleteI think the high demand in homes is a significant issue in the economy. We have noticed a significant increase in interest rates, mortgage rates, and home prices as a result. However, we cant just build more homes to help counter prices as we have also noticed significant increases in building materials. I think it will be very interesting to see how the housing market responds over the year.
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