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asked in Estimation by (24 points) | 335 views

3 Answers

+1 vote

Number of Millennials that own the house:

(Number of Millenials) * ( % Owning House)

((Total US Population) * ( % of Millennials)) * (% Owning House)

Consider total US population be 320 Million and following can be percentage breakdown of population:

0 - 21: 25%

22 - 40: 25% (Millennials)

41 - 60: 25%

60 - 80: 20%

80 - : 5%

((320 Million) * (25% of Population) ) * (% Owning House)

Population of Millennials: 80 Million

(80 Million) * (% Owning House)

What can be millennials doing right now:

1. College: 20%

2. First Few years of Job: 30%

3. Experienced Professional: 50%

Characteristics of anyone owing a house:

1. Stable Job

2. Stable relationship

2. Good Income

What % of millennials own a house:

1. College: 20% * 10% = 2%

2. First Few years of Job: 30% * 20%= 6%

3. Experienced Professional: 50% * 50% = 25%

% Millennials Owning House: 2%+6%+25%=33%

 

Number of Millennials that own the house:

(Number of Millenials) * ( % Owning House)
80Million * 33%= 26.6 Million
 
answered by
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My approach would be:

  • Estimate the total number of millenials in the USA
    • I would go with a simple distribution by age, ie assume there are 320 Mill Americans, equally distributed across 80 years of age. Thus 4 million Americans/every year of birth
  • Estimate the average price of a home (will assume $300K), and the assumption that a millenial will have to save a 10% down payment to put an offer (ie 30K). At this point the estimate is about the number of millenials who have saved $30K
    • Assume the average American starts earning at 22, and makes $50K/yr 
    • Saves 10% every year towards homeownership, netting $5K/yr
    • Thus, takes them 6 years atleast to save
  • So, technically, Americans from age 28-39 can purchase a home
  • Hence 44Mill. millenials who have atleast $5K to put down on a home. I would also halve it assuming folks get into a partnership or union. Hence, 22 million millenials who have the purchasing power to buy a home
  • Of the 5 millenial friends I have, 2 own a home. The rest choose not to buy
  • Assuming 40% of millenials who can purchase a home choose to purchase a home, I would estimate approx 9 million millenials in American own a home

Thoughts on the approach?  

answered by (13 points)
0 votes
I would try to first clarify that Millenials means people born from 1981 till 2000, that is currently of the age 20-40 years of age.

As Total population of US is 300M and life expectancy is 80 years, hence 4M/year assuming a uniform distribution of age. Hence 20-40 years of age people would be around 80M.

Now out of this 80M, we can divide the potential segment in terms of income brackets.

20-25 yrs -> Mostly college-going students earning something equal to an average internship cost =  $ 15K/ year

25-30 yrs -> New Job getters = $ 50K/ year

30-35 yrs -> Mid-level = $ 100K/ year

35-40 yrs -> top-level = $ 150K/ year

Now, an average house cost in the US would be around $300K (downpayment of 10% and EMI of 20% p.a) and assuming that a person on an average doesn't buy more than one house within a year,

% of people having the propensity to buy a house would be ->

20-25 yrs = 5%

25-30 yrs = 15%

30-35 yrs = 40%

35-40 yrs = 70%

Thus, the total # of people in this age bracket owning a house would be 26 M people.
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