Demand Report: Millennials prefer single-family homes
Monday July 20, 2015
While Baby Boomers showed a preference in their early years for apartment living, their grown children are leaning toward the single-family home as their housing preference—whether renting or owning. A Fannie Mae report released July 1, 2015 showed that a rising number of people between the ages of 25 and 34 are occupying single-family homes.
In 2000, 50.9 percent of renters and 84.5 percent of homeowners in this age group lived in a single-family home. In 2013, those numbers increased to 52.4 and 88.9 percent, respectively. Not a huge leap, but the trend continues, according to the report, “Rent or Own, Young Adults Still Prefer Single-Family Homes”.
Patrick Simmons, director of strategic planning for Fannie Mae’s Economic & Strategic Group, said the upward climb is important for builders and developers. “Given the massive size of the Millennial generation, this life-cycle progression should support continued recovery in housing construction, and bodes well for a stronger rebound in the single-family sector in the second half of the decade.”
Previously, Millennials had posted smaller homeownership numbers than their preceding generations, Generation X, Baby Boomers, and the Silent Generation (Traditionalists). But the shift toward the desire for living in a single-family home—as opposed to apartment, condominium, townhome, or multi-family residence—is expected to grow as the Millennials reach their 30s, “prime years for first-time homeownership”, according to Simmons. The improved job market, low interest rates on mortgages, and lower down payment requirements are providing significant incentives to convert Millennials into homeowners.
A National Association of Homebuilders survey of the 25- to 35-year-olds showed that 75 percent want a single-family home, and almost 25 percent are looking to live in a rural area, away from the city. They also like their extras, and are willing to pay for options, like energy-efficiency, larger garages, pantries, linen closets, and walk-out basements. They’ll also find the money in their budget to pay for granite or quartz countertops and premium light fixtures.
Millennials are poised to make a major impact on the housing market. How are you preparing to meet the challenge?