The housing market is enjoying a boom time, and home values are soaring, too. U.S. housing gained $2.5 trillion in value last year, according to Zillow, an Internet realtor service. That’s the biggest jump since 2005.
Homebuilder company Toll Brothers says it is experiencing the strongest housing market it has seen in 30 years. Mortgage lenders made a record $4.4 trillion in home loans in 2020; the biggest lender, Quicken Loans, issued $1 billion of loans per day.
It’s an amazing comeback for the housing industry. Between 2006 and 2009, the average home lost over a quarter of its value. And more than 8 million Americans lost their homes during the economic downturn that was fueled by the housing industry collapse in 2008.
That housing crisis had a big impact on Millennials – now the largest generation in U.S. history. Around 2009, they were due to launch their careers, buy their first homes, and starting families. However, when they graduated from college and entered the job market, they were decimated by the housing crisis and its fallout. By 2018, Millennial home-ownership had sunk to a record low – as the accompanying chart shows, less than 35%.
A new wave of young homeowners jumped into the market in 2019. Even more jumped in during 2020, with the rate of home ownership for Americans under age 35 ending the year at 40%.
They were absent for a decade, but now Millennials make up the largest share of home buyers, according to the National Association of Realtors. DR Horton, the nation’s largest homebuilder, reports that over 40% of its buyers are under age 34.
Think of it this way. The 2008 crisis forced Millennials to delay their acclimation into adulthood. It disrupted the normal flow of the next generation starting out in life. Now they are at the prime age for buying a home, and they are hitting the market in record numbers.
Many of them are not buying ‘starter’ homes, either; their first home is on the upper end of the market, price-wise. “Millennials are finally coming out of the gate,” reported luxury realtor Sotheby’s. “It’s not uncommon for their first purchase to be a multimillion-dollar luxury home.”
In addition, it appears the Millennial-fueled housing boom will be with us for some years because only the first wave of young homebuyers has hit the market so far. More are coming. Pew Research data shows the average age of a first-time home buyer is 31. Last year, the average Millennial turned 31, so this trend is just kicking off.
Homebuilders didn’t do much the past 12 years after the housing bubble burst. Now there is a severe shortage of housing stock. There are only 1 million homes for sale in the United States, according to the National Association of Realtors. This is the lowest number since 1982, and coming at a time when a whole generation of homebuyers will be in the market. It would take less than two months to sell every existing home on the market.
