The 2020 Mid-Year Economic Update_long

Millennial Demand to Drive Growth in Housing, Automobile Markets

Great Recession failed to turn millennials against home ownership.
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The timing of recovery in the housing market is dependent on the millennial generation, according to a recent report from The Demand Institute. Millennials and Their Homes: Still Seeking the American Dream predicts that more than $1.6 trillion of the generation’s income will be spent on home purchases in the next five years.

Given that U.S. consumers generally spend about $2 trillion a year on housing in total, according to The Demand Institute, how this prediction is realized will play an important role in the economy’s growth. Many millennials have waited significantly longer than previous generations to progress in personal independence, the report says, propelling an expected surge in the construction industry.

 “During the downturn, an unprecedented share of young adults did choose to live with their parents rather than strike out on their own, hindering household formation and economic activity,” the report says.

According to the report, the Great Recession did not lead millennials “to believe that home ownership is a poor investment,” further indicating that the housing demand from this age group will increase by 2020.

“As millennials’ economic situations strengthen, their demand will be important drivers of the housing market,” said Louise Keely, president of The Demand Institute.

This generation will also drive the automobile market, the report says: “The vast majority of millennials has cars and uses them regularly — and it is doubtful this dynamic will change anytime soon. Providing transportation alternatives is important, but innovations to make cars and thoroughfares more efficient, safe and intelligent will be even more critical to the success of American communities.”

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