Short List

Will Y Buy?

While the housing market slowly improves, real estate industry analysts are paying special attention to members of Generation Y (also known as “millennials,” born from the early 1980s to the early 2000s), who are expected to drive housing demand in the coming decade. The latest State of the Nation’s Housing report by the Joint Center for Housing Studies of Harvard University finds that tight credit, still-elevated unemployment and mounting student loan debt among young Americans are moderating growth and keeping millennials and other first-time homebuyers out of the market.

The report finds that although the housing industry saw notable increases in construction, home prices and sales in 2013, household growth has yet to fully recover from the effects of the recession. In fact, 2.1 million young Americans in their 20s, saddled with higher-than-ever student loan debt and falling incomes, live with their parents, while student loan balances increased by $114 billion last year.

Still, the number of households owned by people in their 30s is expected to increase by 2.7 million over the coming decade, which should boost demand for new housing, the study contends. “Ultimately, the large millennial generation will make their presence felt in the owner-occupied market,” says Daniel McCue, research manager of the Joint Center, “just as they already have in the rental market, where demand is strong, rents are rising, construction is robust and property values increased by double digits for the fourth consecutive year in 2013.” (See The Y Factor)