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asked in Estimation by (24 points) | 123 views

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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)

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