Zillow Housing Forum

On July 24, 2014, Zillow hosted its fifth annual housing forum in Washington, D.C., bringing together policy makers, housing experts and economists for a day of discussion and debate over the future of housing and the trends that will shape it.

Entitled “The Big Picture – A Longer Term Perspective on Housing,” the housing forum focused on a variety of top-of-mind topics including: the challenges posed by rising mortgage rates, mortgage finance reform, how to house the millennial generation, new trends in urban and suburban planning and the growth in rental housing.

Keynote Address

The keynote for the forum was given by Jason Furman, Chairman of the Council of Economic Advisers.  He explored trends in the behavior of America’s millennial generation of young adults, paying particular attention to the implications for the housing sector. Furman argued that it is premature to suggest that trends among today’s youth are a reflection of a profound change in their preferences or attitudes in the aftermath of the Great Recession when many of these trends were on the horizon long before the recession began.

He argued that while the temporary effects of the recession may have delayed millennials’ entrance into the labor force or their decision to get married, there does not appear to be any evidence that this is the result of a permanent shift in their priorities and preferences. While challenges such as rising student debt remain on the horizon, Furman felt confident that through effective policy, the nation could address those challenges and that a vibrant housing sector could continue to be a key driver of economic growth.

Millennials: Housing the Next Generation

Millennials represent the largest generation in US history. As they enter the housing market en masse, are millennials willing to step up and take the place of aging Baby Boomers? Or has the aftermath of the housing recession left them with financial and emotional scars and a different perspective on housing than prior generations? To answer these and other questions, Zillow’s recent housing forum convened a panel of housing experts to discuss these issues in a panel entitled “Millennials: Housing the Next Generation.”

Moderated by Catherine Rampell of the Washington Post, the panel included Thomas Bozzuto, Chairman and CEO of the Bozzuto Group; Mollie Carmichael, Principal at John Burns Real Estate Consulting; and Dowell Myers, Professor at the Sol Price School of Public Policy at the University of Southern California.

A common theme in their discussion was the shifting attitude of millennials on housing. While noting that millennials are too large a group to be spoken of as a cohesive whole, the panelists were in broad agreement that millennials have different priorities than other generations when it comes to housing. Millennials are demanding a more urban and amenity-rich residential experience. Increasingly, millennials are willing to sacrifice space to be close to what they like, such as walking to the local Starbucks and grocery store.  Thomas Bozzuto described this trend as the “Europeanization of America.”

Another clear trend has been the recent decline in the homeownership rate among millennials, with over 30 percent of millennials currently living at home. Dowell Myers pointed out that this decline should be seen in the context of a longer term trend of Americans delaying marriage and parenthood, while Mollie Carmichael added that student loan debt and the poor job market is “having a huge impact” on millennials’ housing choices.

But there was a general consensus that while millennials have delayed homeownership, eventually they are likely to move out of urban rentals in search of single family homes and good schools for their children. Mollie Carmichael cited surveys showing that most millennials want to eventually own a home, while Thomas Bozzuto emphasized the allure of government subsidies for homeowners. However, based on an audience poll, millennials may find locating an inexpensive home challenging, with over 52 percent of forum attendees identifying affordability as the most important housing issue over the next five years.

And this scarcity of affordable housing could have important implications going forward. As Dowell Myers pointed out, “homeownership is the major way in which American’s build wealth.” Ensuring that all Americans have access to affordable housing will remain a crucial challenge going forward.

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