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Millennials want to own homes too, if US economy would consent

Agnel Philip, Bloomberg News on

Published in Home and Consumer News

There are barriers on the supply side, too. Builders all over the country have been shying away from the more affordable homes that millennials favor. That's limiting availability and driving up prices, leaving the market ill-prepared for a large influx of young buyers. Industry analysts cite labor shortages, restrictive zoning laws and materials prices among the reasons.

"The result is that price gains continue to exceed income growth through scarcity," said Rob Dietz, chief economist at the National Association of Homebuilders. "Particularly in that smaller home market, which is the hardest market for a builder to essentially reach and build to these days."

Jessica Feliciano has noticed the squeeze. Every house the 34-year-old has looked at in Hartford's desirable suburbs got snapped up before she could make her move.

"Once a good house comes on the market and it's priced properly, it's gone within like five days," she said. "So if you don't schedule a showing and make a decision basically on the spot, it's gone."

Zoning and associated land costs are especially tough in Connecticut, helping make it one of least dynamic housing markets in the U.S. The state's 169 towns all have different standards, and most have been resistant to building more homes per acre, even though in places where that's been attempted, it's often been a success.

"Every town has their own politics and their own zoning and their own ideas of what they want," said Johnny Carrier, a builder near Hartford, who succeeded with a neighborhood of townhomes in Newington and is looking for opportunities to replicate it elsewhere.

The U.S. housing industry expresses confidence that in spite of all the obstacles, millennials will come round to home-ownership as their life-situations change. While they've been getting married and having children later than their parents did, young adults are starting to cross barriers typically associated with buying.

The number of households is edging up, as the last millennials graduate from college and strike out on their own. When that trend surfaced in 2014, young adult households typically became renters. Last year, more became owners.

 

"Right now, probably a third of our housing business is young couples coming out of the apartments," said Chris Nelson, a builder in Simsbury, an upscale Hartford suburb. "We really think that that's just the beginning. That over the next three to five years, we're going to see a ton of people coming out of the apartments, buying homes."

Conditions should eventually get easier for those buyers: More homes are expected to come on the market as Baby Boomers downsize or pass on. But it may take a while -- and it may be another, yet-to-be-named generational cohort that sees the full benefits.

"In the long run, we're going to age out of the problem," said McLaughlin, the Trulia economist. "That may be, however, another 20 years before that starts to happen en masse."

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