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In 2015, millennials will be biggest home buying group

Staff writer |
Zillow predicts a big year for home buyers in 2015, with more millennials entering the market amid rising rents. Zillow's annual housing predictions also identify the five best housing markets for first-time homebuyers this coming year.

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2015 Predictions: U.S. rents will outpace home values by the end of the year; builders will begin constructing more, less expensive homes; millennials will overtake Generation X as the largest group of homebuyers; and homebuyers will have more negotiating power in 2015.

First-time homebuyers will be a critical part of the housing market next year, and certain markets will have more favorable conditions than others for buyers looking for that perfect entry-level home. Markets most favorable to first-time buyers are those with strong income growth among 23-34 year olds, significant growth in the number of entry-level homes on the market and home prices that won't take a big chunk out of buyers' paychecks.

Roughly 42 percent of millennials say they want to buy a home in the next one to five years, compared to just 31 percent of Generation X.

Home value appreciation will continue to cool down, from roughly 6 percent now to around 2.5 percent by the end of 2015. But rents will see no such slowdown, and will continue to grow around 3.5 percent annually throughout 2015.

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