Gen Y Has Strong Bent for Homeownership
The much-heralded echo-boom generation—better known as Generation Y—has inherited their parents’ dream of homeownership, according to the early readings of a survey to be published late this year by the Urban Land Institute. But they might not want to live where you think.
Although prognosticators have predicted a march back to urban centers, the preliminary findings of ULI’s statistically valid online poll of 1,241 members of the Gen Y cohort found their location patterns will be pretty much the same as their parents.
“The more things change, the more they stay the same,” said ULI chief executive officer Patrick Phillips during a media briefing at the group’s annual meeting in Wahsington earlier this month.
Roughly a third of the 18- to 32-year-olds queried considered themselves to be city people, another third said they were suburbanites and the rest classified themselves as either small-town people or country folk. And they want to remain in those places.
“This is not a fantasy,” said Leanne Lachman, the New York-based real estate consultant and market analyst who did the survey. “They want to live where they live currently. They envision buying in the same place.”
The survey, which is nationally representative of the generation, also found that Gen Yers are much more hopeful about their prospects for ownership and their timing than other research has indicated.
Within the next five years, 53% of those now 18 to 24 expect to be owners. The share climbs to 73% in the segment now 25 to 29, and to 78% for those already 30 or older. Overall, exactly two-thirds—the very same homeownership rate as today—expect to be owners before 2015 comes to an end.
“These are very, very optimistic young people. They are very optimistic about their housing future,” said Lachman, who is president of Lachman Associates. “Even if they still live with their parents, half believe they will be owners by 2015.”
In another key finding, a whopping 82% of the expected owners believe they will be living in a single-family home and 5% think they’ll reside in a townhouse or rowhouse. Only 9% envision themselves in an apartment condominium.
Six out of 10 expected renters see themselves in an apartment. But a third of this group figure they’ll be renting a single-family residence, townhouse or rowhouse.
Phillips said the findings are important because “once housing begins to recover, GenY will drive housing development patterns.” And in that the group has not soured on ownership as some have assumed, adding, “These young people deserve more attention that they are getting.”
One finding that surprised Lachman is that a third of the 18- to 32-year-olds surveyed are already owners. And it’s not necessarily the oldest Gen Yers who have already bought homes, either. Indeed, 15% of those 18 to 24 already own, as do 44% of those 25 to 29 and 54% of those 30 to 32.
“That’s much higher than we expected,” she said. “They have inherited the dream of homeownership at an early age. If we had known that, we would have asked a lot more penetrating questions.”
Said Phillips, “Young people are in fact moving out of their parents’ basements. And they have relatively conventional tastes relative to cities and the suburbs.”
Generation Y now comprises 25% of the U.S. population. With 77.4 million people born between 1978 and 1995, the cohort is slightly larger than the 76.2 million baby boomers born between 1946 and 1964. And of the group 22 and older, 4.2 million to 4.3 million will form households every year for at least the next five, according to Lachman.
“There will be a very steady stream of young people who will start out as renters” but gravitate quickly towards ownership as soon as they can afford to buy, the researcher said. “The issue is where they can afford to buy. While singles will prefer the city, ultimately they will move out to the suburbs in a high proportion” as they marry and grow families.