Commentary from Forbes says the American housing market is on the verge of the largest housing boom on record, and with an insider saying the market can thank the millennials.
The piece, penned by Stephen McBride, points out that American has a severe issue with housing inventory. Census Bureau data shows an average of 1.5 million homes were built each year since 1959. However, just 900,000 homes have been built annually since 2009. Fewer homes have been built in the past decade than in any decade since the 1950s.
However, McBride said Barry Habib, founder and CEO of real estate advisor MBS Highway, said the market is about to see an influx of millennial buyers that could turn the housing market around.
Habib was quoted as saying: “ … the housing market is like a rollercoaster trainer car. When the first few train cars go over the bump, it’s kind of slow. The real momentum kicks in when more and more cars go over the hump. In the past year or two, the first wave of young homebuyers came into the market. But year for the next decade, tens of millions of millennials will hit home-buying age.”
New data from ValuePenguin, however, says that millennial homeownership fell 20% between 2009 and 2016.
The report found that the population of homeowners under the age of 35 fell from 9.2 million in 2009 to 7.3 million in 2016. Additionally, the number of millennials who are renting during that same period increased from 14.6 million to 15.2 million.
ValuePenguin said that these millennial homeowners accounted for more than 12% of all U.S. homeowners in 2009. Also, within the millennial age group, the number of homes owned by millennials fell by 18.5% over eight years.
The trend of declining millennial homeownership reversed in 2017, which is also the first year since 2009 that the number of millennials renting did not increase. Millennial homeownership grew to 7.5 million in 2017, while the share of renters under the age of 35 stayed at 15.2 million. ValuePenguin states that nearly 67% of all millennial households were renters as of 2017.
With more potential buyers entering the market, McBride points out that builders need to start building more houses.
“Builders have been super cautious over the past decade,” Forbes states. “Who can blame them? Many saw their friends and competitors go out of business when the market crashed. But with the housing boom showing no signs of slowing, they’re finally getting to work.”
New home starts over the past month rose to their highest level since June 2007. Building permits are also at their highest level since May 2007.