Following a 60% drop in mortgage volume in the first quarter of this year, the housing industry is facing a shift in demographics that will continue to impact the forward-looking mortgage market for years to come, according to the most recent CoreLogic MarketPulse report.
The report shows that the millennial generation will affect the market in both the short and long term. Because millennials are remaining renters longer than expected, the industry is seeing less home-buying among 21- to 34-year-olds.
The rate of homeownership among Millennials in 2012 was 37.9%, while that rate was nearly 14% higher — at 51.6% — for baby boomers when they were 25 to 34 years old.
While millennials are becoming homeowners at a much slower pace than before, they are also more focused on attaining a higher level of education, which means that many of them will have a higher future earning potential.
The proportion of millennials between 25 and 32 years old with a bachelor’s degree was 34% in 2013, up from 24% among baby boomers when they were the same age, the report shows.
“Educational attainment is theoretically an investment in future income earning capability, so the fact that millennials are more educated than prior generations should prove beneficial for their ability to become homeowners in the long term,” writes Deputy Chief Economist Sam Khater in the MarketPulse report.
So once millennials make the jump to homeownership, the housing and mortgage market will feel the effects of their decision.
To read the full report, click here.
Written by Emily Study