When the pandemic struck last spring, CoreLogic forecast we’d enter a housing slump with prices rising a measly 1% by April 2021. Not only was that forecast wrong, it wasn’t even close. The housing market soared during the COVID-19 recession as buyers took advantage of historically low interest rates. Over the past 12 months, the median sales price of existing homes has climbed 16% from $270,400 to $313,000.
But where do we go next? Already mortgage rates are climbing—rising seven consecutive weeks—while lumber and copper shortages are pricing some Americans out of new home construction. To see where housing is headed, Fortune teamed up with Researchscape International to poll 1,031 U.S. adults between April 2 to 5.* We also took a pulse on how Americans are feeling about homeownership.
Our findings suggest this competitive housing market could last for years. Over the next five years, 54% of Americans between the age of 25 to 34 say they plan to buy a home. Among that same age group, 48% say they plan to do it in the next 12 months. While the latter figure is way too high to come to fruition, it does signal that young renters are serious about getting their own piece of real estate.
It’s well known that the millennial generation dwarfs Gen X, however, that demographic gap is largely a result of the five huge birth years between 1989 to 1993. And we’re currently in the five-year window when this seismic group of younger millennials will hit the age 30—the all-important age for home-buying booms. If 1 in 2 members of this massive cohort actually go through with their plan to buy a home in the next five years, it’ll more than sustain the current boom.
But a hot housing market alone won’t guarantee we keep the current rate of home appreciation. Following the 16% price jump over the past year, CoreLogic forecast just a 3.2% over the coming 12 months.
“Homebuyers are experiencing the most competitive housing market we’ve seen since the Great Recession…as affordability challenges persist, we may see more potential homebuyers priced out of the market and a possible slowing of price growth on the horizon,” wrote CoreLogic CEO Frank Martell in a recent report.
It was feared that the real estate crash of 2008 and ensuing foreclosure crisis would turn off an entire generation from homeownership. That narrative hasn’t panned out. In fact, the rate of homeownership is rising again. After bottoming out in 2015 at 62.9%, the rate of homeownership has climbed to 65.8% as of the end of 2020.
Americans are still bullish on homeownership, with an average across all age groups of 77% saying homeownership is a positive investment. As shown in the chart above, among adults aged 25 to 34—a.k.a. the group that will power the housing market over the next several years—77% also say real estate is a positive investment.
*Methodology: The Fortune-Researchscape International poll was conducted among a national sample of 1,031 adults in the U.S. between April 2 and 5. The findings have been weighted for age, race, sex, education, and geography. The credibility interval is plus or minus 4 percentage points.
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