Millennials Will Trigger Next Housing Boom
The next housing boom will be triggered by millennials, according to a report by the Business Insider.
Like older demographic groups, the combined grouping of 20- and 30-somethings are interested in getting married, starting families, buying homes and living the aspirational suburban life. The catch is that they are delaying all this, in part to build careers in large metros.
William Smead, CEO of Smead Capital Management, discussed why this lag among millennials could be responsible for the next housing boom. He wrote that their move into "exile"- away from home and college towns - is only delaying what will eventually be a boost for new home construction.
Smead states, "We would argue that many Millennials have removed themselves from their hometown and their college town via their employment and the lateness of marriage. We find it easy to estimate that the current new homebuilding pace of 629,000 units in 2016 will grow to a 1.5 million unit run-rate. This would truly be a boom and could carry the U.S. economy along with it."
Many studies show that individuals under thirty years of age change jobs much more often than prior generations. The average age to marry has risen above 28 years old, with men at 29 in the mix. BCA Research has taught us that American women who have three children are likely to bear more of them in their thirties than in their twenties. The Census Bureau just reported a drop-off in teenage pregnancies and a lower rate of birth for women in their twenties. This was offset by sizable growth in pregnancies between 30 and 45.
"We believe that the current fears of a slower economy are the last gasp of a post-financial meltdown era and are about to be replaced by exiles in the US building homes and having families," Smead wrote. "This will produce much higher economic growth, spawn higher interest rates and benefit companies with a direct and/or indirect connection to an America, which will be much different."