Millennials are fueling a generational housing bubble - and it's set to pop in t...
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Millennials are fueling a generational housing bubble - and it's set to pop in the next decade as demand drops, researchers say
Millennials are fueling a generational housing bubble, researchers said in a new report.
That's due to demand from Millennials, who are at their peak age range for household formation.
But Baby Boomers will be a drag on demand, and post-Millennial generations will be smaller.
Millennials are fueling a generational housing bubble that's set to burst over the next decade as demand for homes falls off, according to researchers.
In a recent report from the Indiana University Center for Real Estate Studies and the Indiana Business Research Center, researchers said Millennials — who are between their mid-20s and early-40s, are in the prime-homebuying age — have pushed up home prices in recent years as demand outweighs supply.
But the situation will start to reverse over the next decade, as Baby Boomers begin age out of the housing market. Meanwhile, post-Millennial generations will be smaller as population growth slows.
That could lead to an excess of housing, potentially pushing down prices and sparking a crash in the real estate sector.
"Plainly put – a generational housing bubble is on the horizon. New housing built now to meet strong demand may sit vacant in a decade. Demand reversal will intensify by the mid-2030s, when the annual number of homes that seniors add back to the market is expected to be 40% higher than current levels," researchers said.
The could be offset by policies that encourage seniors to age at home instead of nursing facilities, ease first-time home purchases, or boost immigration, the report added.
But population trends indicate that many housing markets will peak in the next decade, it cautioned.
"As Millennials pass through their first-home buying years and Baby Boomers through their last stages of life, the current period of strong demand will transition into a period of slowly declining demand," the report said. "The industry must adjust current business decisions to this eventual changeover in market conditions or risk substantial oversupply and value loss in the housing market of the future."
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