Millennials will step up to the plate of homeownership in a big way in 2015, with the age cohort overtaking Generation X as the largest group of homebuyers amid rising rents and cooling home price growth, according to Zillow.
Soft housing demand from millennials (under the age of 35) so far has reflected their tendency to delay marriage and having children, not a lack of interest in homeownership, according to Zillow Chief Economist Stan Humphries.
Forty-two percent of millennials say they want to buy a home in the next one to five years, compared with 31 percent of Generation X (35 to 50 years old), according to Humphries.
By the end of 2015, millennials will become the largest pool of homebuyers, he said.
Fast-rising rents and cooling home price growth could fuel demand from millennials, as well as other renters.
Home value appreciation will slow to 2.5 percent year over year by the end of 2015 from about 6 percent today, according to Humphries. But rental growth won’t let up. Rents will continue to increase around an annual rate of 3.5 percent throughout 2015.
“As renters’ costs keep going up, I expect the allure of fixed mortgage payments and a more stable housing market will entice many more otherwise content renters into the housing market,” Humphries said.
At least one other real estate expert also sees a breakthrough year for millennials. Jonathan Smoke, chief economist at realtor.com, recently said that millennials could evolve into “Gen Own” in 2015 from “Gen Rent,” on the back of substantial job growth in that group.