How Will COVID-19 Impact Millennial Homeownership?
In just a few short months, the world has changed. We aren’t hugging our friends, we wear masks in public, some of us have lost our jobs, others have plunged into the realm of remote work- the list could go on. One thing is for certain: we are living in “unprecedented times.” Change is the only constant and it’s time we start rolling with the punches. While living in the midst of a global pandemic is certainly uncharted territory, there is something predictable. Nationwide- and even global- crises like this have a massive impact on the economy.
Before you panic, that isn’t necessarily bad news.
Since COVID-19 first reached a global scale, economists have been talking about the possibility of a recession. For millennials, this wouldn’t be our first rodeo. We have had several recessions since 2008. In fact, some would argue that South Africa has been in an ongoing recession since 2013.
There’s no denying that COVID-19 will have a lasting impact on consumer finances. One of the most common questions I’ve been asked in the past few months is, “How will the impending recession impact millennial homeownership?” It’s a well-known fact that significantly fewer millennials own homes than their baby boomer counterparts. In South Africa, only 330,000 millennials bought homes in 2019. That is less than .2% of South Africa’s millennial population. In addition, older millennials are far more likely to buy homes than younger millennials, as the average age to buy a home in South Africa has increased from 27 to 35.
Why is that? You might ask.
Affordability is the #1 reason why millennials are shying away from homeownership.
Millennials are much more concerned with their finances than previous generations. Despite stereotypes about being lazy and entitled, statistics have shown that millennials prioritise paying off debt, start saving earlier and save more money than previous generations.
As a real estate investor, I have already begun to see firsthand the effects that COVID-19 is having on millennial homeownership. Banks are dropping interest rates, home prices are decreasing and more millennials are becoming optimistic about the prospect of owning property.
Post-COVID-19, homeownership may become a realistic option