Are younger buyers driving the housing boom? A geographic perspective on US home purchases, 2018-2021

ABSTRACT

Rapid growth in US housing prices has coincided with the large Millennial demographic group reaching peak homebuying age, leading some to speculate that new demand from younger buyers is putting upward pressure on home prices. This Research Note uses data from the Home Mortgage Disclosure Act mortgage data to examine where younger buyers are purchasing homes. Data show that the share of buyers under age 35 fell in more than half of US counties, including 45% of metropolitan counties. A county- and MSA-level regression analysis finds a null or slightly negative correlation between changes in the share of buyers under age 35 and changes in home prices, and a small positive effect on debt-to-income ratios from 2018 to 2021, providing little to no evidence that young buyers are pushing up home prices.

KEYWORDS:

• Housing affordability
• mortgage choice
• age

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. I use mortgage buyers under age 35 as a measure of “younger” or “millennial” buyers. The millennial age range is roughly defined as those born between 1981 and 1996, or between 21 and 37 in 2018, and 24 and 40 in 2021.

2. The average annual percent change variable is calculated by taking the average of the year-over-year change in home prices relative to the prior year:$\frac{1}{4}\sum _{t=2018}^{2021}\frac{pric{e}_t-pric{e}_{t-1}}{pric{e}_t}$

Additional information

Notes on contributors

Nicholas Kacher

Nicholas Kacher is an Assistant Professor of Economics at Scripps College. Before joining Scripps College in 2019, Dr. Kacher earned his PhD in Economics at Colorado State University, where he was a foudning research assistant for the Regional Economic Development Institute. His work research focusses on housing affordability, entrepreneurship, and environment.