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Millennials are finally ready and eager to buy a home but face a new hurdle: They can’t find anything to buy.
A record number of millennials wanted to buy homes in 2020, according to a First American housing index. But the inventory shortages that are hitting all price points of the housing market have risen in importance to further delay their entrance into homeownership.
Before the pandemic, millennials said they were struggling to save for a down payment due to lost savings from the financial crisis. Many were also burdened with student debt. Many in this generation were also delaying marriage and having children, which are often linked to homeownership.
But now this generation of young adults is feeling more financially stable. Millennials’ potential homeownership demand has climbed by 3.5 percentage points year over year—more than any other generation, according to First American’s analysis.
The peak year of millennials turned age 30 in 2020, while the oldest turn 40 this year. The generation is the largest potential homebuying group, and the real estate industry has long been anxiously awaiting its entry into real estate.
But the record low inventory has been plaguing the housing industry since the pandemic, leading to tight competition.
The housing market has been about 6.5 million homes short of population needs since 2000, according to National Association of REALTORS® data.
“We’ve been underbuilding for years,” Gay Cororaton, the director of housing and commercial research for NAR, told Business Insider earlier this year. Because of this, homeownership is “going to be more difficult for millennials.”
Despite the hardships, millennials will be a driving force in the housing market for years to come, said Odeta Kushi, deputy chief economist at First American, in a report. “While millennial homeownership has been delayed relative to their generational predecessors, millennials now have the greatest influence on the housing market and remain poised to fuel a ‘roaring 20s’ of homeownership demand,” Kushi writes.