The U.S. housing market in 10 years will be dominated by minorities and millennials, says study
STATEN ISLAND, N.Y. — Come 2025, there will be 2.7 million more 30-somethings in the nation’s real estate marketplace, according to a Harvard housing study.
According to the Joint Center for Housing Studies of Harvard University, minorities will make up 36 percent of all U.S. households in 10 years. And 46 percent of those aged 25 to 34 — the millennial generation — will make up the nation’s first-time home buyer market.
The influx of homeowners in their 30s will boost demand for more housing stock nationwide, according to the study.
Currently, tight credit, unemployment, and mounting student loan debt among millennials are moderating growth and affecting the number of first-time home buyers in the real estate marketplace.
As a result, young Americans, saddled with higher-than-ever student loan debt and falling incomes, continue to live with their parents.
In fact, some 2.1 million more adults in their 20s lived with their parents last year, and student loan balances increased by $114 billion, says the report.
“The debt the millennials are going into is crushing. In 10 years when they have rebounded, the entry market and top of the market will be fine, but the middle market, which right now is in the $500,000 to $900,000 range, is anyone’s guess,” said Jon Salmon, broker/owner of Salmon Real Estate in Castleton Corners.
Although the housing industry saw notable increases in construction, home prices, and sales in 2013, household growth has yet to fully recover from the recession.
“We (Staten Island’s real estate market) are on the path to getting back to where we were,” said Laird Klein, president of Staten Island Board of Realtors (SIBOR) and broker/owner of the New Dorp-based Laird Klein Realty.
“If it’s being projected that people who currently can’t afford to own a home will be able to in the next 10 years, that’s a very positive outlook and it brings the American dream to life for people who couldn’t formerly be part of it,” he added.
In fact, Staten Island is already on the road to housing market recovery. Home sales in the borough are up 3 percent from this time last year, said Sandy Krueger, CEO of SIBOR.
One primary factor to realizing the millennials’ potential in the housing market is for the economy to grow to the point where their incomes start to rise.
“The housing recovery is following the path of the broader economy,” says Chris Herbert, research director at the Joint Center for Housing Studies.
“As long as the economy remains on the path of slow, but steady improvement, housing should follow suit.”