By Jane Barden
Over the past year the housing market has been an incredible force in keeping the U.S. economy afloat. The desire to move out of densely populated cities into suburban or rural areas increased greatly. The pandemic revealed to many Americans the power of working remotely. This along with an unfortunate increase in unemployment levels caused high records of migration all over the country. This mass movement is projected to continue as people get more clarity on what post-pandemic life will look like.
Although the pandemic has played a major role in forcing demand for homeownership in the last year, it is to be noted that there are over 70 million Americans in the millennial generation that are now reaching peak home-buying years. This force will continue to power the housing market even after the wake of the pandemic.
But, what impact has the pandemic had on the financial state of these some 70 million people. Many were presented with loss of income which in turn resulted in late or missed rent payments, having an effect on highly important credit scores. While more mortgages originated in the fourth quarter of last year than in any single quarter since the Fed started tracking it in 2000, surpassing the previous high from 2003, we may see a significant change moving forward.
Demand for homes will remain high. But, as Katy O’Donnell at Politico stated, “If there aren’t enough homes to meet that demand, the largest generation in the country won’t be able to start building equity, which will in turn delay other financial decisions. Despite making up over a third of the workforce, millennials own less than 6 percent of all U.S. wealth, according to Federal Reserve data.”
Meanwhile, inventory is expected to stay low. There still remains to be a shortage of skilled labor and increasing cost of materials. The price of lumber is up about 180 percent since April — an increase that works out to about $24,000 being added to the price of the average home, according to the National Association of Home Builders.
Ultimately, we can expect tough entry barriers for millennials. Inventory is to remain low while prices continue to soar. This may come as a concern to many.