By Dr. David Eifrig, editor, Retirement Millionaire
Almost one in five young adults are living with their folks now. That’s a higher percentage of young adults doing so in the U.S. than at any other point over the past couple decades…
This has led to constant mainstream headlines saying that millennials will never buy homes or have children… and that those developments would lead to a decline in the overall housing market.
But such ominous predictions were premature…
Millennials are growing up. The younger end of their generational bracket graduated college within the last few years, and the top end is getting close to 40 years old.
And as millennials age, they’re having children… building careers… and buying their own houses (even if they still need some financial help from mom and dad).
It’s contributing to a boom in housing.
Now, for conservative investors, “boom” is a dirty word. A “boom” implies a “bust”… and suggests it’s coming soon. When the stock market is booming, some feel it’s time to be cautious.
But real-world booms are different.
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This isn’t a speculative boom. This isn’t about house-flipping and investment properties.
Rather, there just isn’t enough housing to go around.
After the housing bust of 2008 and 2009, homebuilders stopped doing their jobs. They stopped building new homes. And over the past several years, they’ve been trying to play catch-up.
But even still, not enough homes are being built. New housing starts recently plummeted below their long-term average because of the coronavirus…
Currently, there are not enough homes on the market to meet demand. U.S. existing home sales inventory is near an all-time low…
With so few existing homes on the market, new homes need to be built.
A recent report from real estate broker Redfin also found that new homes are becoming a larger share of the market. One in five homes for sale in April were new homes… compared with just one in six the year before.
It has been a fact for a couple years that demand for housing is greater than supply.
Plus, with interest rates likely to stay at near-zero for the next couple years, we should see plenty of new buyers taking advantage of low mortgage rates. It’s the perfect combination for a boom in real estate.
Millennials just recently took over as America’s largest generation… And that’s going to be a strong tailwind for the housing market.
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