First American Financial Corporation’s Homeownership Progress Index (HPRI) revealed that the nation’s homeownership rate is currently lagging behind demand.
Mark Fleming, Chief Economist at First American, commented on the increase in demand within the market recently: “As we navigate the unprecedented impact of COVID-19, the home has taken on added significance and there are signs that homeownership remains one of the main tenets of the American Dream. After hitting a bottom in the second week of April, mortgage applications to purchase a home increased for nine consecutive weeks, even exceeding levels from a year ago for five straight weeks.”
Fleming then pointed to the possibility of a hopeful future for the nation post-COVID, thanks in large part to the housing industry: “Housing may be positioned to lead the recovery, a role it has traditionally played in previous downturns, with the exception of the Great Recession. In the recovery from the Great Recession, the homeownership rate hit a generational low of 63% in 2016, but it has been steadily rising since. A combination of demographic and economic factors has driven the steady rise since the low point and remains poised to fuel demand in the years ahead.”
Fleming pointed particularly to Millennials as being the generation most likely to lead the charge in housing demand moving forward. However, many factors have delayed this charge, according to Fleming: “Millennials are the largest generational group in the history of the U.S., and that’s not the only thing that differentiates them from their generational predecessors. Millennials are more diverse, more educated, and have historically chosen to delay critical lifestyle triggers to buying a first home, including getting married and having children, in favor of furthering their educations.”
Although their homeownership dreams have been delayed by such factors, Fleming is still banking on the belief that Millennials will rally and overcome these obstacles: “According to a 2019 survey, 88% of millennials believe homeownership is important for personal success, and there are signs that millennials will continue to be a driving force in homeownership demand. It appears millennial homeownership has been delayed, not denied.”
Fleming added: “Despite the pandemic-driven economic downturn in 2020, millennials are still aging, in large numbers, into the key lifestyle decisions that increase the likelihood of homeownership. This year, the largest section of millennials will turn 30, entering their prime homeownership years. Though the pandemic presents new challenges to achieving homeownership, millennial lifestyle decisions will continue to support potential homeownership demand in the years ahead, meaning millennials may be poised to fuel a ‘roaring 20s’ of homeownership demand.”