Despite concerns about their current presence, millennials still have a major role to play in shaping the housing market in the coming years, researchers assert in a new report from the Demand Institute (TDI).
Based on an analysis of economic and consumer research over the last 18 months, TDI predicts the number of households headed by millennials will reach 21.6 million by 2018, representing an increase of 8.3 million since 2013.
That gain in younger household formations is expected to translate to $1.6 trillion spent on home purchases and $600 billion spent on rent in the next few years—more on a per-person basis than any other generation.
While most of those new households are expected to rent, the report shows a combined 84 percent either already own a home or plan to purchase one someday.
Furthermore, out of the nearly three-quarters of millennial consumers who said they plan to move in the next four years, 48 percent cited their desire to own their home as one of their top reasons for moving.
Louise Keely, president of TDI and SVP at Nielsen, which jointly operates the think tank, said the feelings shown in the survey demonstrate that today's young adults might not be as negative on homeownership as some commentators might believe.
"A fundamental question about Millennials is whether their coming of age in the Great Recession has shaped their goals and aspirations to be different from those of previous generations," Keely said. "We found that, while this generation has many unique characteristics when it comes to their housing choices, they share many of the same intentions as young adults in previous decades."
One thing TDI researchers found that does fit with most reports: Gen Y has its own specific financial challenges keeping it on the sidelines of the housing market, especially in the area of student debt. In their research, they found that among the younger members of the 18–39 age group, those without student loans tend to have higher homeownership rates than those that don't, regardless of whether or not they graduated from college.
On the other hand, homeownership rates are higher for college graduates between the ages of 30 and 39, suggesting the boost in income that comes with a college degree seems to play a bigger role.
To cater to those millennials who have found themselves at a disadvantage as a result of high debt and a weak job market, TDI suggests lenders explore non-traditional financing options, including single-family rentals and hybrid contracts like lease-to-own agreements.