Nearly all millennials, the largest generation in U.S. history, expect to be homeowners, according to a new report from the Urban Land Institute based on a national survey of 1,270 members of the group conducted in November.
The group includes U.S. residents ages 19 to 36 and totals nearly 79 million. They’re just beginning to come into their own, and their take on homeownership and renting will have big effects on the future of real estate.
Of the 74 percent of millennials who currently do not own homes, more than two-thirds (70 percent) said they expect to by 2020. Most said they expected to use savings for their down payment.
But, as a whole, millennials’ homeownership outlook is not all that rosy, with less than half saying they feel that homeownership is a good investment. The study’s authors suggest that this demographic group may be gun-shy on this aspect of homeownership because of the recent significant housing collapse.
Not surprisingly, a big chunk of millennials (half) are renters, paying a median monthly rent of $925.
Of those who rent, a relatively large percentage (38 percent) live in single-family homes, which the authors attribute to the large number of homes snapped up by investors and turned into rentals in the wake of the housing crash.
Contrary to what some may believe, millennials are not an urban-dwelling group, according to the report. Only 13 percent live in or near downtowns, while 63 percent live in other city neighborhoods or in the suburbs.
However, the generation does have a strong preference for traits often found in urban settings like a high degree of walkability, diverse transportation options, and easy to access to shopping and places to “hang out,” noted Leanne Lachman, president of real estate consulting firm Lachman Associates LLC and one of the co-writers of the report.
Millennials’ “desire for an urban lifestyle suggests that the current trend of urbanizing suburbs will present lucrative opportunities for the development community for decades to come,” Lachman said.
“This is a generation that places a high value on work-life balance and flexibility,” Lachman added. “They will switch housing and jobs as frequently as necessary to improve their quality of life.”
Other notable stats from the survey:
Twenty-one percent currently live at home, and of those, 42 percent moved back home after living independently. Only 10 percent of those now living at home expect to still be there in five years.
45 percent of millennials moved at least twice in the past three years, which reflects the high mobility of the generation.
Among the millennials who rent apartments, two-thirds live in low-rise garden-style units that tend to offer fewer amenities but are more affordable than high-rise, amenity-rich developments.
Of those who own, 46 percent said they bought because they believe that owning is a good long-term investment; 41 percent said it offers stability; and 40 percent said they wanted more privacy and space.
Sixty-two percent of those who own are very satisfied with homeownership in general, and 64 percent listed the stability and safety of their neighborhood as the most positive feature of their location.