For a large number of millennials, the generation born between 1981 and 1996, the time to buy a home has never been quite right.

Older millennials were not yet 30 when the financial crisis of 2007-2008 upended the housing market and the US economy, causing the worst downturn in the country since the Great Recession. When younger millennials came of age to buy a home, the US housing market was booming, driven by high demand and low inventory, with prices reaching heights that made properties unaffordable to many.

Despite adverse economic conditions, and tired of waiting for the perfect moment, many got on the property ladder anyway—and their late arrival has shaken up the entire housing market, according to experts.

“Because of the high cost of living, millennials have had to delay marriage, they’ve had to delay having children. So what’s going on is that there’s been a delay in household formation, though right now the rate of household formation is double the rate of population growth,” Phil Powell, executive director of Indiana University’s Business Research Center, told Newsweek.

“What that means is that there is unprecedented demand for housing and that is why housing prices are going up,” he added. Millennials, said Powell, “are putting upward pressure on prices and it’s going to continue, it’s not a fad or some bubble in the housing market. This is real, it’s demographic.”

They’re also not the only generation keeping prices up.

Alejandra Grindal, chief economist at Ned Davis Research, told Newsweek that baby boomers (those born between 1946 and 1964) are also adding price pressure. “They are the second-largest age cohort in the U.S., and they’re also driving up demand, partly because they can afford to,” she said. Millennials, in 2020, overtook baby boomers to become the largest generation in the U.S.

“Compared to prior generations,” she added, “[Baby boomers] also plan on staying in their homes much longer. They don’t want to go to assisted living or nursing care. They want to live in their homes as long as possible. Plus a lot of them would like to own second homes.”

Older Buyers, Higher Prices

Waiting for a better, cheaper time to buy a home, in 2022 millennials brought up the average age of a first-time buyer to 36, according to the National Association of Realtors, from 33 in 2021.

Sara Coers, a lecturer in real estate at Indiana University, said this generation waited because “they have been much more tolerant of renting, whereas previous generations were much more insistent upon homeownership.” They have also accepted the fact that they have to pay a much higher price for a home than their parents did.

“They are really the victims of freak circumstances,” Coers told Newsweek. “We overbuilt prior to the last recession and the capital markets, the lenders, the banks thought we didn’t really want to build new homes after that. They weren’t paying attention to the future of household formation. And we dramatically undersupplied the country.”

For Coers, millennials are a “disruptive generation” because of their size and their record household formation rates, which have clashed with a record undersupply of housing, the result of the last recession. “And that has led to some extreme buying behavior,” she said.

Unfortunately, experts say the future still looks bleak for millennials.

“If I’m a millennial household, I either have to allocate more money to savings or reduce my expectations,” Powell said. “It’s the brutal reality of supply and demand. Millennials are saddled with higher real costs of college than their parents and with higher housing costs. It’s going to continue to be bad for several years.”

In the near future, more millennials are going to look into buying a home, Coers said, “bringing up demand as the market works through that generation.”

Coers thinks that it’s likely that the U.S. will build a lot of homes to catch up with the millennial generation “and then there will be smaller generations coming forward and that will hopefully regulate the housing market, because lack of affordability has become a huge problem.”

Grindal added that millennials are also changing the profile of homeowners in the U.S., with “more single-person buyers” while it used to be more common for married couples to buy a home.

“Maybe that whole notion of having to get married and start a family doesn’t really have to precede wanting to buy a home,” she said.

More Diverse Homeownership

It’s not all doom and gloom when it comes to millennials taking over the housing market. According to a recent NAR study, the increase in homeownership among millennials comes with an increase in homeownership among minorities.

Over the next five years, according to the NAR report, released on February 13, 1.5 million Black households are expected to turn the median homebuying age, at the same time as 775,000 Asian households and 2.2 million Hispanic households.

“Millennials and Generation Z are more racially and ethnically diverse. While all first-time buyers are facing challenges in entering into homeownership, as more young buyers enter into the homebuying market, there will be a rise in minority owners,” Jessica Lautz, deputy chief economist and vice president of research at NAR, told Newsweek.

In 2022, according to the NAR report, there were 10.5 million more homeowners than 10 years before, with all ethnic groups having increased their homeownership rates. Asian Americans increased their homeownership rates by 6.1 percent between 2012 and 2022, while Hispanic homeownership grew by 5.4 percent. White homeownership increased by 3.1 percentage points, while Black homeownership rose by only 1.6 percent.

A Future Bubble

For Grindal, the big question surrounding the future of the housing market is about supply. “It comes from two sources,” she said. “Existing supply and people willing to leave their current homes. And as we’ve said, baby boomers are not going to unleash new supply to the next generations very soon.”

On top of that, now that mortgage rates are higher, homeowners who have secured lower rates are likely to hold on to their homes. “That’s keeping the home supply pretty contracted,” Grindal said.

For Powell, the upward trend in home prices, now mainly driven by millennials’ demand, will continue for the next five to 10 years. “The only break we can get on housing prices is if they build more houses,” he said.

In the long-term, millennials can expect to be hit by yet another blow. While they are likely to buy homes at a very high price now because of low supply and high demand, when they’ll be ready to sell their house in 20 years they’ll likely face a drop in demand in the market, driven by demographic decline, which will cause their properties to lose value.

“The housing bubble is going to be in 10-20 years, at the end of the life of baby boomers, when they finally put their houses on the market.”

In a study published by Indiana University, Powell and Coers wrote that a generational housing bubble is on the horizon. “New housing built now to meet strong demand may sit vacant in a decade. Demand reversal will intensify by the mid-2030s when the annual number of homes that seniors add back to the market is expected to be 40 percent higher than current levels,” the researchers wrote.