According to the US Census Bureau, Millennials represent the largest American generation. They have resulted in some significant trends in the country, such as the uptick of Millennials who plan to become homeowners soon. Unfortunately, there are challenges for Millennials, such as lower average income and older generations remaining in their homes longer.
Monumental Proportions Crisis
Populous cities in the United States are currently experiencing a real estate squeeze. Strict building regulations, increasing population, and shortage of construction labor cause this lack of available and affordable housing. Older Millennials, however, are shaping the housing market. More than 50 million Millennials are looking forward to purchasing homes by 2022.
Just as the demand for housing is increasing, the for-sale list is decreasing. Most recently, the current number of listed houses is at its lowest since 1999. The starter home inventory is also decreasing by 17% annually. To make the situation worse, the problem is severe in walkable and gentrified neighborhoods. Nevertheless, most Millennials prefer to live in such neighborhoods.
Over the past few decades, American cities have experienced massive revitalization. Declining crime, high city incomes, a robust inflow of professionals, and high graduation rates have shifted Millennials back to cities. Millennials want to enjoy new cultural, community, and economic opportunities.
However, the demand for starter homes exceeds the existing housing inventory. In the next year, the list of available houses can only meet 6% of the demand.
Further, Millennials are finding it hard to save for new homes. Due to the high costs of living, their paychecks are being stretched much thinner. More than 50% of Millennials in some major cities are earning less than their parents did. Thus, the lack of residential inventory is reducing the chances of homeownership for Millennials.
Build, But Not in My Backyard
Development in urban metros is becoming harder due to a variety of barriers, including zoning codes. Current house owners are also fighting new developments in their neighborhoods.
Millennials are getting hurt by such policies. Overcoming these issues is not an easy task, nor is it one that can be accomplished by a single person. All generations need to work together to prevent an unmanageable housing crisis.