Some housing experts feel that millennials, the largest generation in U.S. history according to some estimates, are not as interested in homeownership than previous generations and prefer to rent instead. According to a Fannie Mae Commentary and Topic Analysis released Friday, however, millennials who rent have just as much desire to own a home as the general renter population.
"Some have argued that millennials are less interested in homeownership than previous generations, preferring the flexibility of renting," said Sarah Shahdad, strategic planning analyst for Fannie Mae Economic and Strategic Research Group. "Many connected to housing finance are seeking new ways to tap the millennial population considering their potential to generate significant homeownership demand."
According to Fannie Mae's recent National Housing Survey (NHS) data, millennial renters (ages 25-34) today have as much desire to own a home as the general population of renters.
The NHS Q2 2015 data found that 72 percent of millennials indicated in that "owning makes more sense (than renting) because you're protected against rent increases and owning is a good investment over the long-term."
In addition, 60 percent noted that "owning makes more sense (than renting) because you have more control over where you live and a better sense of privacy and security."
Fannie Mae also found that 91 percent of both 18-24-year-olds and 25-34-year olds said that they are likely to purchase a home a some point, while 9 percent said that they are likely to always rent.
Fifty-two percent of millennials noted that personal financial reasons such as income, savings, or debt levels are the most important factor when it comes to choosing the right time to purchase a home. Other factors included: life cycle reasons (36 percent), career factors (30 percent), housing or mortgage market conditions (22 percent), and economic conditions (17 percent).
"The vast majority of millennial renters indicate they do plan to buy at some point in the future, but appear to be exercising caution from a financial perspective," Shahdad said. "This caution may support more sustainable housing costs for consumers and a healthy housing market overall. While the crisis may have stalled wage growth for younger renters, recent improvements in household income seem to be reflected in consumer perceptions, with increasing shares saying that their household income is significantly higher now than a year ago. These improvements are an encouraging sign for millennial renters aspiring to own in the future."