Much has been written in recent years about the millennial generation and the challenges young people face in getting a mortgage loan, but whether today’s young adults choose to dip their toes into homeownership or rent their homes, one thing is clear: They prefer to live in single-family homes in either scenario.
Offering a recent commentary for Fannie Mae, Patrick Simmons, director of strategic planning for the government-sponsored enterprise’s Economic & Strategic Group, said millennials’ “desire for single-family homes is not only substantial, but should strengthen in coming years as more members of the cohort age into their 30s, prime years for first-time homeownership.”
Simmons’ commentary is based on Fannie Mae’s latest Housing Insights edition titled “Rent or Own, Young Adults Still Prefer Single-Family Homes.” Previous editions of Fannie’s Housing Insights have documented the distinctive housing consumption patterns of today’s young adults, including their reduced rates of household formation and homeownership.
Many studies have shown that millennials’ household formation and homeownership rates tend to be substantially lower than previous generations, a growing concern in the financial and housing industries given the massive size of the millennial generation.
But this latest edition examines another important dimension of millennials’ housing consumption, which is the type of structure they occupy. According to Simmons, a growing body of research shows that millennial homeowners aged 25-34 are more likely to reside in a single-family home than their predecessors.
At the same time, millennial renters also prefer to occupy a single-family home, a characteristic they share with their predecessor, Generation X.
Simmons writes that millennials’ desire for single-family homes may eventually lead them down a path to first-time homeownership as they move into their 30s.
“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,” Simmons writes.
Going forward, millennials’ decisions about when to form new households, whether to buy or rent and what type of housing to occupy will help to determine residential construction levels, home sales volumes and the distribution of construction and lending activity across the multifamily and single-family markets, according to the full Housing Insights report.
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