Why Millennials won’t buy Boomer McMansions

by Kevin Hawkins on August 19, 2015

Self-confession: I love surveys. Data is my kryptonite. I got hooked in my grad school stats class and I’ve never looked back. At Great Western Bank, I created the Realty Confidence Index, which surveyed face-to-face broker-owners in 23 states. At Fannie Mae, I got to pitch to reporters nationwide the most comprehensive housing surveys of its day. At Imprev, I helped craft and launch the real estate industry’s first Thought Leader Survey and continue to spearhead that effort. This all means I know intimately what Mark Twain meant when he popularized the saying, “There are lies, damn lies and statistics.” Two people can draw completely different conclusions from the exact same data. Which is why I am having problems with a few statistics about Millennials and their immediate impact on home buying: Zillow’s economist Stan Humphries says, “By the end of 2015, millennial buyers will represent the largest group of homebuyers.” The National Association of Realtors 2015 report on generational trends says that Millennials make up the largest share of homebuyers at 32 percent and comprises 68 percent of first-time buyers. A TD Bank survey says that 62 percent of potential first-time home buyers think that they will purchase a home within the next two years; among millennial survey respondents, the number rises to 67 percent. The problem I am trying to reconcile is that there are many other statistics that seem to contradict the notion that Millennials are going to drive the housing market, including the numbers below, from a blog (“Millennial Marketing Madness”) I wrote last November provided by economist Elliott Eisenberg: In 2010, households headed by Millennials had a median income of $37,600, now it’s just $35,300. 41.4% of Millennials have student loans, which is up from 33.6% in 2007 and 23.3% in 1998. Student loan balances are up from $10,000 in 1988 to $17,300 in 2013. Just 38.6% of Millennials hold equities, down from almost half in 2001. Median net worth for Millennials overall is a paltry $10,400. Add in these statistics from the TD Bank survey that touts how Millennials are going to “own” the housing market in the next two years: 70 percent of Millennial respondents said that they need to save for a down payment. 52 percent of Millennials said that they need to pay down debt. More than one-in-five consumers (22 percent) looking to purchase their first home said that they can’t […]