Millennial Home Buyers: Pulte and Pew paint slightly different pictures.
According to a March 2014 press release, the PulteGroup, one of the nation’s largest homebuilders, “54 percent of millennials indicate the economy is better than a year ago. This optimism remains in line with the recent Pew Research indicating 49 percent of millennials say the country’s best days are ahead. With this increased confidence, nearly three-fourths (74 percent) of millennials view now as an excellent or good time to buy the things they want or need.”
Contrast that with other Pew Research data, such as an 8.2% unemployment rate for these potential millennial home buyers and Pulte’s forecast may be just a tad optimistic. Pulte says that 85% of the millennials will buy a home in the future. That future may be a few years down the road when one considers the heavy debt burden of many millennials.
Millennials are burdened by debt but optimistic.
According to the March 2014 Pew Research study “They are entering adulthood with record levels of student debt: Two-thirds of recent bachelor’s degree recipients have outstanding student loans, with an average debt of about $27,000. Two decades ago, only half of recent graduates had college debt, and the average was $15,000.”
According to Pew study, “Despite their financial burdens, millennials are the nation’s most stubborn economic optimists. More than eight-in-ten say they either currently have enough money to lead the lives they want (32%) or expect to in the future (53%).” As it concerns prospective home ownership, Pulte found that “They associate owning a home with happiness (62 percent), independence (61 percent) and achievement (59 percent). Further, millennials view a home as a financial investment (33 percent) and like the thought of calling themselves a homeowner (35 percent).”
The study also points out that millennials are less trusting than preceeding generations, such as GenXers and Boomers. Perhaps the mixture of debt and trust explains why only 26% of millennials are married today. I have a son who is a millennial and he is still unmarried. However, in most other regards he does not match the profile. He has been gainfully employed since graduation, has virtually no debt of any kind and his outlook of the economy could not be described as optimistic.
Perhaps potential millennial home buyers are mostly optimistic because, given the realilty of their situation, that’s the only way to be.
Note: Pulte defines millennials as 25-34 olds while Pew Research defines the group in the graphs as 25-32.