Millennials Are Applying To Buy Homes More Often Than Boomers and Gen X in Red-Hot Housing Market

Realtor shows a couple a home.
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The housing market has been very hot in the past year — real estate being seen as a solid investment by many — and driving the demand are members of the millennial generation. In a surprising economic fact, millennials now make up the bulk of those submitting home purchase applications.

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According to the CoreLogic Loan Application Database, millennials made up 67% of first-time home purchase applications and 37% of repeat home purchase applications in 2021.

This represents the largest share of home purchase mortgage applications coming from millenials since 2016, with the demographic accounting for 51% of home-purchase mortgage applications in 2021. This uptick represents an increase of five percentage points from 2019, according to CoreLogic.

From ‘Generation Rent’ to Becoming Homebuyers

Deidre Woollard, real estate analyst at The Motley Fool, told GOBankingRates that “so much was made of millennials being ‘Generation Rent’ and how that would change housing.”

“Instead, they were just a little bit later than previous generations and they are now the biggest force in housing,” she said. “However, the fact that they started later does mean that they’ve missed out on some of the boost to personal wealth that equity in a home can provide.”

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David Russell, VP of market intelligence at TradeStation Group, agreed.

“The shift toward renting wasn’t a trend. It was just a delay of the inevitable,” he told GOBankingRates. “All these predictions about being permanent renters didn’t look at the demographic realities of people growing up. Three things distorted the picture pre-Covid: student debt, the hangover of subprime and the revival of great cities like New York. Now those forces are losing relevance and the demographic realities are catching up,” he added.

While millennials have more buying power in affordable markets compared to high-cost areas, the data shows their share is much higher in some high-cost metros as well — especially areas with high-tech job opportunities, per CoreLogic.

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The data finds that millennials made up a higher share of the potential homebuyers in the Midwest markets and in metros with high-tech job opportunities. For example, San Jose, California, had the highest percentage of millennials applying for a home mortgage at 64%, followed by Austin at 61%, Seattle at 61%, Pittsburgh at 61%, and Boston as well as San Francisco at 60%.

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In addition, Salt Lake City, Milwaukee, Minneapolis and Buffalo were also among the 10 metros with the highest percentage of millennial applicants. These metros with the highest share of millennial applicants either offer high-tech job opportunities or affordability as attractive qualities.

On the other hand, metros in Florida and Arizona had the lowest percentage of millennials applying for a home mortgage. Miami and Las Vegas had the lowest percentage of millennial homebuying applicants at 43%, followed by Orlando and Tampa at 44%, as well as both Phoenix and Jacksonville at 45%.

Supply and Demand in the Housing Market

One major issue that the housing market faces is the question of when supply and demand will even out. Inventory remains at historic lows and new construction can’t make up enough of the shortfall, Woolard said. High housing demand can also make it difficult for younger people to win bidding wars. First-time buyers often lose out to all-cash buyers or investors buying to flip or rent out the homes, according to The Wall Street Journal.

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“There’s been talk of a ‘silver tsunami’ when Baby Boomers put their homes on the market but many retirees are opting to age in place and they are living longer,” Woolard said. “All of this is putting continued pressure on housing prices which are expected to climb in 2022. A potential slow rise in interest rates may help keep prices from rising too dramatically but if inventory hovers below a three month supply it’s likely that bidding wars will keep prices up.”

Indeed, increasing millennial demand in the housing sector comes at the same time that home prices are skyrocketing.

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Nick Grandy, construction and real estate senior analyst with RSM US, told GOBankingRates that existing housing supply for single family homes is at 1.1 million as of October 2021, while prior to the pandemic, the lowest-ever recorded inventory level was 1.29 million, according to the National Association of Realtors.

“So prices are skyrocketing from a two-fold approach, the large increase in millennials who have delayed their home purchase as they were dealing with student loan payments and saving up for a down payment, coupled with inventory being at the lowest level ever recorded,” he said. “This trend has staying power as the supply issues are not going to be quickly resolved. It takes time to build new houses and it is unlikely that the millennial thirst for home ownership will be quenched any time soon.”

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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