The Stephen S. Fuller Institute

The housing market is responsive to both economic and demographic factors. Since the Recession, economic factors have played the largest role in the Washington region. In upcoming years, however, demographic trends will put new pressures on the housing market. As Baby Boomers (54 to 72 year olds) move into their next phase of life, many home owners in this generation may wish to sell and either downsize or move. Because this generation owns about 40 percent of all homes owned in the Washington region, even a modest change in preferences could have an out-sized effect on the housing market. The increased inventory that would result from even a modest “Baby Boomer sell-off,” combined with rising interest rates and high levels of student debt among potential buyers, has the potential to moderate sales prices.

The oldest Millennials are a birth cohort including people who were born between 1983 and 1992. In 2017, this birth cohort was between 25 and 34 years old and included 936,360 people living in the Washington region. In 2012, this cohort was between 20 and 29 years old and only included 834,460 people in the Washington region. This 12.2 percent increase primarily reflects a net five-year in-migration (both international and domestic) as these oldest Millennials reached their late 20s and early 30s. The Washington region has historically been a net importer of young adults as they “age up” from their early and late 20s into their late 20s and early 30s. The increase in the oldest Millennials that occurred between 2012 and 2017 was somewhat smaller than the increase that occurred in prior generations as they reached the same age. Going forward, these trends indicate that the Washington region will be less able to capture the members of the oldest Millennial generation as they all reach their 30s and beyond.

The number of 25-34 year olds in the Washington region increased significantly in 2011. These gains moderated in the following years and, in 2015, the region was home to fewer 25-34 year olds compared to 2014. This slowing trend reversed in both 2016 and 2017, and the increase in 2017 was the largest since 2013. Despite the strong gain relative to prior years, the Washington region’s growth continued to lag that in the U.S. and the other large metros.