Housing prices are not cooling off because younger generations, especially Millennials and Gen Z, are driving demand. Let’s break down why this is the case.
1. Millennials Are Reaching Prime Homebuying Age
Millennials, the largest generation in the U.S. at 73 million, are hitting their 30s and 40s—the prime years for homeownership.
At age 30, only 33% of Millennials own homes, but by age 40, that number jumps to 55%. With 45 million Millennials at the median age of 30, the next decade will likely see nearly 10 million more Millennial homeowners. As they move into their 40s, this surge in homeownership will continue to drive demand.
Millennials are poised to significantly impact the housing market for years to come.
2. Gen Z Will Add Even More Pressure to the Market
While Gen Z is still young, this generation of 69 million is already showing early signs of homeownership, with 8% owning homes by age 20.
If Gen Z follows the same trajectory as Millennials, their homeownership rate could reach 33% by age 30. This would mean an additional 17 million new homeowners over the next decade. As they age, the demand for housing will only increase further.
Gen Z is about to enter the market in force, putting even more pressure on the housing supply.
3. A Supply Shortage Will Keep Prices High
Despite strong demand, the supply of homes is not keeping pace. Only 1.3 million homes are built annually, which translates to 13 million homes over the next decade.
However, Millennials and Gen Z alone could drive demand for 20 million homes during this time. With a 7-million-home gap between demand and supply, basic economics suggests that housing prices will stay high, if not rise further.
The mismatch between supply and demand will maintain upward pressure on home prices.
Housing prices aren’t going down anytime soon. With Millennials and Gen Z entering the market in record numbers, demand will remain strong and keep prices elevated.
If you’re curious about how these trends affect the area you’re looking to buy in, I can help you get a clear picture. Text “REPORT” to 303-619-2883, and I’ll create a custom Real Estate Report Card for your preferred area. Just provide the ZIP code, city, county, or even a specific address—and I’ll send back key insights about homeownership rates, affordability, demographics, and more to help you make the best decision.
