The median age of first-time home buyers is generally in the early-mid thirties, and there are tens of millions of Americans at or approaching that threshold.
The massive millennial generation - some 72 million strong in 2019 - the oldest of whom are approaching their 40s, is aging into their prime career-building, family-starting and home-buying years. The first factor driving demand is a huge demographic shift that has been steadily unfolding for the past several years. Unlike 2008, when a large portion of demand was driven by somewhat artificial factors that ultimately turned out to be unsustainable, including easy access to cheap mortgage financing, demand today and going forward is driven by several largely healthy and durable trends we expect to continue for years. Millennials are aging into their prime home-buying ages & overcoming obstacles Demandĭemand for housing has steadily grown in recent years, driven by a number of factors that are fundamentally different from 2008: longer-running demographic shifts, continued recovery from the Great Recession, and recent pandemic-related housing considerations and low mortgage rates that have pushed demand into overdrive.
And the state of those fundamentals in 2021 is ultimately far healthier, and that health far more likely to be sustainable over the longer-term, than the out-of-whack fundamentals from a generation ago.Įxamining each of these fundamental pieces on their own, including how each has evolved to its current point and how they are different from 2008, can help us paint a bigger picture of a housing market positioned to see the boom of the past year continue to roll on. March marked the largest one-month increase ever recorded in the more than 25-year history of the Zillow Home Value Index - surpassing even the housing run-up preceding the Great Recession - and the 10.6% rise from March 2020 was the largest annual increase in 15 years.īut that view ignores the fact that the housing market doesn't operate in a vacuum, and is driven by the interactions of a number of relatively simple but critically important fundamentals - including supply and demand, financial conditions and technological advancement. Those with an eye on recent history can't be blamed for thinking current market conditions are nearing their endgame, with rapid price appreciation and fierce competition for homes eerily reminiscent of the late stages of the mid-2000s housing boom.
Housing demand will stay strong, sales volumes will continue to grow and more balance between home buyers and sellers will help ensure sustainable health in housing for years to come. The great reshuffling in housing that began roughly a year ago at the outset of the pandemic - and the heightened housing demand, elevated home sales activity and rapid price appreciation that came with it - is only just beginning, and will not simply end as the pandemic slowly begins to recede. Housing supply is extremely tight - arguably the one factor most dramatically different today from the 2008-era market, when a wave of foreclosures following years of robust homebuilding pushed supply well ahead of demand and led prices to collapse.ĭemand will stay strong as the large millennial generation continues to age into homeownership, and more inventory is expected to soon hit the market - bringing more balance to the market and creating a smoother experience for everyone. Today's housing fundamentals - including supply, demand and overall financial conditions - are markedly different than in 2008, and current conditions are largely sustainable.
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