Millennials’ desire for smaller homes may have a big impact on the future demand of some of the most popular homes today.
Young adults are getting married later in life, they’re delaying their first home purchase (often
due to student loan debt) by up to seven years in some cases, and they’re also having children later in life.
The U.S. fertility rate has plunged to its lowest level since the Centers for Disease Control began tracking such data more than a 100 years ago. From 2011 to 2015, the number of 30- to 34-year-olds without children at home increased by 4 percent, according to Census data. Among 25- to 29-year-olds, the number increased by more than 5 percent.
What does this mean for housing? For millennials who remain childless, a large house with four or more bedrooms likely will no longer be as in demand. Households without children tend to prefer smaller homes, condos, or townhouses near city amenities rather than an oversized single-family home.
“The fact that we’re having smaller-size families I think naturally means that the demand for smaller-size housing would get greater interest than before,” Lawrence Yun, chief economist for the National Association of REALTORS®, told
The Washington Post.
As baby boomers enter retirement and their adult children move out, many are expected to choose to downsize too. Economists predict that could add increased pressure to the market for smaller two-bedroom condos and townhouses.
Yet, the new-home market is staying focused on building bigger rather than smaller. Ninety percent of new single-family homes had three or more bedrooms in 2016.
Source: “One Big Reason Millennials Want Smaller Homes – And It Could Change the Housing Market,” Apartment Therapy (Sept. 25, 2017) and “Adults Who Opt Not to Have Kids Cause Ripple Effects in U.S. Housing Market,” The Washington Post (Sept. 14, 2017)
