Housing crisis

Millennials optimistic about buying a home as housing crisis persists

  • Nearly half of millennials are optimistic about buying a home this year, according to a NerdWallet survey.
  • They are better prepared financially than ever to buy, but the housing crisis persists.
  • Although housing prices may moderate, mortgages may become more expensive and there is still not enough housing available.

Millennials are feeling pretty good about their chances of becoming homeowners this year.

Almost half (45%) are optimistic about buying a home in 2022, according to a new NerdWallet survey. That’s more than any other generation, including Gen Z (35%), Gen X (24%) and Baby Boomers (31%). These millennials are also more optimistic than the majority of the 2,035 American adults surveyed, of whom only 34% said they felt better about their ability to buy a home in 2022 compared to 2021.

The optimism largely stems from their personal finances, as many respondents cited more savings and higher incomes as reasons for their positive sentiment. Yet with millennials feeling more financially prepared than ever to buy a home, they could still be deeply disappointed: the housing crisis that pushed many new homeowners out of the market last year persists.

Millennials spent years scraping together enough savings for a down payment on a home, finally ready to buy in 2021 as they made strides in wealth creation and interest rates hit historic lows. But the pandemic, a shortage of wood and a lack of housing since the Great


Recession

— exacerbated by high demand in an age of remote working — created the perfect storm.

The generation found itself in the midst of its second housing crisis before turning 40, as first-time home buyers faced a severe shortage of starting homes and record prices for available homes. . Daryl Fairweather, chief economist at Redfin, previously told Insider that there just aren’t enough homes for millennials to buy – America’s biggest generation.

Enter 2022 and demand still exceeds supply. About 26 million Americans said in the survey that they plan to buy a home in the next 12 months. But as NerdWallet points out, only five to six million homes have been sold in each of the past five years.

Dana Peterson, chief economist at the nonprofit The Conference Board, wrote in an October article for Barron’s that we’ve only seen the start of demand for millennial housing. The frenzy, she said, will continue thanks to rising incomes, remote working and a robust economy.

“The sheer size of the millennial population, and the fact that they are just entering the peak years for raising families and earning money, means that housing demand has room to operate,” had previously told Peterson to Insider.

Although there has been a slight increase in new home construction since the end of last year, most are at the higher end of the market. The National Association of Realtors’ director of housing and business research, Gay Cororaton, previously told Insider that means affordability “remains a big issue.”

Now, price growth in the U.S. housing market and across the economy may moderate in 2022. But as Insider’s Alcynna Lloyd recently reported, that doesn’t mean housing will become more affordable. Fannie Mae predicted that regulators would focus on reducing inflation, which would translate into more expensive mortgages. And house prices would still outpace wage growth.

“We expect the narrative around housing this year to shift from one of extremely limited inventory leading to hyper-competitive bidding wars to one in which more and more potential buyers are shut out of the market,” the authors wrote. Fannie Mae researchers. “We expect the rapid growth in house prices eclipsing wage gains, combined with the diminishing effects of past stimulus checks and accumulated savings, will make it increasingly difficult for many buyers potential.”

Many millennials with enough money saved up and a bit of luck will still be able to become first-time homeowners. But for many of their peers, home ownership will remain an unattainable dream.