Impact of Generation Y on The Housing Market

As the housing market recovery continues to push forward, 

Generation Y, also known as the Millennial Generation, are 

starting to make their mark and are reenergizing the market 

across the country. In fact, Millennials now make up 78 percent 

of current first-time homebuyers.

What are the defining characteristics of Generation Y? Also 

referred to as the Millennial Generation, Eco Boomers and the 

Internet Generation, this group has grown up in an environment 

of Internet resources, instant worldwide communications, digital 

technologies, intense multitasking and rising student debt. 

Millennials now make up 78 percent of 

current first-time homebuyers.

Although previous generations saw first-time homebuyers 

entering the market at an earlier age, typically in their early 

twenties, the Millennials have taken their time and are just now, 

collectively in their late twenties and early thirties, starting to 

enter the market. As the largest generation currently living, these 

entry-level homebuyers and their influx of new activity offers 

a potential added jump-start to the slowly improving housing 

market.

Generation Y faces a few additional barriers. Limited inventory, 

increasing home prices and managing a larger student loan debt 

than any generation before are all hurdles this group must jump 

before actually getting their foot in the door. In addition, the 

importance of credit scores in securing a mortgage approval 

are more important than ever before – and adaptations to credit 

scoring models have made securing and maintaining a high credit 

score more difficult for Generation Y and younger consumers 

with limited credit lines and shorter credit histories.

What the market is revealing is that 

Millennial homebuyers carry a median 

income of $73,600 and tend to purchase 

older homes averaging 1,800 square feet 

and costing around $180,000.

In fact, 20 percent of this age group had to put off a home 

purchase in order to save up for a down payment, where 

in previous generations they were able to receive financial 

assistance from families or dealt with lower down payment 

requirements. Of that group, 56 percent said student loan debt 

was the biggest obstacle. 

The good news is that those who recently bought homes are very 

optimistic about their decision. Of Millennials under 33 who 

recently bought a home, 87 percent consider their purchase to be 

a sound financial investment.

What the market is revealing is that Millennial homebuyers carry 

a median income of $73,600 and tend to purchase older homes 

averaging 1,800 square feet and costing around $180,000.

As this generation pushes forward, their homebuying activities 

will no doubt be closely watched and the impact on the housing 

market will be felt across the country.

By Marcus McCue, Executive Vice President Guardian Mortgage Company, Inc.