About 12M new households will form by 2028, though total home sales could be as high as 25M since some will replace older sellers leaving homeownership for good.
NEW YORK – Between 2018 and 2028, the number of households is projected to increase by up to 12 million, and Generation X and millennials are expected to drive most of that household formation.
However, the total number of home sales could be higher as younger buyers replace dropped households over that time. Overall, the two generations could create nearly 25 million new households by 2028, according to the CoreLogic Insights Blog.
The largest cohort of millennial buyers have yet to surface on the market, researchers note. That segment, from ages 28 to 30, numbers nearly 15 million and is approaching the average age to buy a first home, 33 years old.
But the market already faces a home inventory shortage – the lowest level on record – as these younger generations prepare to enter the housing market. As a result, home prices have increased 1.6-times the rate of incomes over the past two decades.
Record low mortgage rates over the past few months have helped offset high prices, but first-time homebuyers face increasing affordability woes as they try to come up with a down payment. While the monthly mortgage payment and insurance have dropped by 3% compared to a year ago, the down payment needed is up 8% – from about $20,000 to about $22,000 for a median-priced home at $225,000.
“This may be a daunting challenge for some younger buyers, particularly given that the median financial asset holding of families headed by a person under 35 years of age is only about $8,500,” CoreLogic notes on its blog.
Source: “Affordability Challenges Ahead: Large Demographic Tailwind Has Arrived Amid Lowest Inventory of Homes for Sale,” CoreLogic Insights Blog (Dec. 29, 2020)
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