Could Generation Y Lift the Housing Market?

A few years ago, the real estate community was gripped with Millennial Fever: the idea that the Millennials (or Generation Y), born between say 1983 and 2003 (according to NewGeography.com anyhow) and representing the largest demographic group in the United States after the Baby Boomer generation, would be the single most important thing to housing. Quite a few people, even now, believe that Gen Y would transform the nation by the sheer weight of their numbers.

Naturally, a population that large will have enormous impact on home purchases, no? Back in 2008, a couple of Harvard men (George Masnick and Eric Belsky) showed that by 2010, the Millenials (now aged between 25 and 34) would constitute 8 million new homebuyers, by far the largest and most important segment.

Well, 2010 has come and gone, and the National Association of Realtors (NAR) has released an interesting new study, in which it concludes, "The share of adults under age 35 living at home, especially among those aged 25 to 34, is at the highest level since 1981."

And as we all know, the housing market is not exactly the picture of vibrant health.

But there are still those optimistic sunny people who believe that surely, this enormous group, some 80 million strong, would get married, have babies, and therefore, buy houses. They're not wrong. Some will, because homebuying is driven by family formation more than just about any other factor.