Intentions and people's actual behavior are often, as we witness about ourselves and others, not the same. Nor are they even, at times, in one another's orbit.

But when intentions--or plans--to buy a home get measured over time, the pattern of those measurements can helpfully foretell ups and downs in actual activity.

This chart reflects that buyer intentions--as they're benchmarked each quarter by the National Association of Home Builders in its Housing Trends Report--seem to have succumbed to a momentum smothering array of forces that moved a home buying scenario out of the near-term horizon for many people. A percentage index from a snapshot in the 4th quarter of 2017 to the same last quarter of 2018, dropped by 11 points to 13% of the adult sample universe.

Still, in spite of the loss in momentum across the board among might-be buyers of all age ranges, nearly one in four millennials--22%--indicates he or she or they do plan to purchase a home within the next 12 months.

Remember now, for any of the 20-some birth years for the millennial adult cohort--now aged 37 down to 18--you're talking about 3.8 million people, and if one in four of them planned to buy a home in a year, you've got quite a healthy market of 847 thousand Millennial adults each birth year who'd fit the criterium as "planning to buy."

Even subtracting for the Millennials who are already homeowners, take any five-year age-range for Millennials, and that market alone baloons to about 4 million Millennials who plan to by a home in the next 12 months. And that's just counting the, say, 32 to 27 year-olds.

Now, a commonly raised culprit here--when you start to try to unpack the intention from behavior and to understand what's holding Millennials back--is student loan debt.

Wall Street Journal staffers Josh Mitchell and Laura Kusisto last month reported on an analysis from the Federal Reserve that directly implicated college loan debt --calling it "a meaningful barrier"--as a cause for suppressing home buying patterns of young adults.

Homeownership among people ages 24 to 32 fell 9 percentage points, to 36% from 45%, between 2005 and 2014, the Fed said. While many factors affected the homeowner rate, the Fed said 2 percentage points, or about a fifth, of the decline was tied directly to student debt. That translated into 400,000 borrowers who could have owned a home by 2014 but didn’t because of student loans.

So, one in five young adults who have not purchased a home--compared with young adults in earlier cohorts at the same age--can be chalked up to either the bad credit consequences, the inability to save for a down payment, or sheer monthly payment overload that tie back to college loan debt.

An NAHB analysis further dismantled the data, illuminating the impact of college debt on home demand here, addressing in particular, the fact that higher educational attainment--in spite of higher levels of debt--tie powerfully to solid mortgage credit risk (i.e. fewer defaults).

At Zelman & Associates, a recent issue of The Z Report took up the topic, and looked at the data from another--inverse--perspective. From this vantage point, what had appeared to some as a soul-crushing mega-reality became a highly navigable path to opportunity.

As in, only one and five of the Millennials "missing" from the home buying dance floor can be attributed to college debt.

"To rephrase the paper's conclusion, 80% of the peak-to-trough decline in young adult homeownership rates was attributed to factors other than student debt, yet student debt is where the headlines focused. To deemphasize the dramatic impact of the financial crisis on employment, savings and family formation for young adults is highly questionable. Framed differently, the 2018 estimated homeownership rate of 25-34 year olds will be approximately 41% higher than in 2014 even though student debt is more elevated today, pinpointing other factors as more relevant.

The operative term here is "other factors as more relevant."

The challenge, then, is how to navigate the truly relevant factors in identifying, engaging, courting, and converting the one-in-four Millennials who plan to buy, and understand the specifically relevant factors.

Ali Wolf, senior economist at BUILDER's sister company Meyers Research, has a a couple of observations that align roughly with the Zelman take on the issue of student loan impacts on Millennial demand.

  • If someone goes to university, graduates, and finds a job they are qualified for, then student loan is not necessarily a bad thing. With higher education, individuals will take on more debt (unless bank of mom and dad helps). Higher education generally helps college grads make more money (roughly $20,000 a year than a high school grad). The higher income and financial knowledge from the extra schooling actually does good for the housing market. For individuals that drop out, student loan debt can be extremely burdensome and will be a negative to homeownership.
  • Extra monthly costs create compromises. If a Millennial really wants to know a home, they need to decide what do they value most. Maybe they compromise on location, design, age of home, quality of home, etc. In my research, younger buyers are willing to compromise on a few things for their home purchase, but there’s also a threshold where just staying renting and saving for a larger down payment makes more sense.

What, then, are the take-aways here, beyond the facts that both student debt and headline risk may be factoring into NAHB data that shows a diminished pool of people who intend to buy over the next 12 months?

We can name three.

  1. Home builders and their investor partners live--or die--in the world of small numbers, not large ones. Macro trends are not necessarily meaningless, but often they mis-color or fail to see opportunity within their broad reaches of implications. In fact, despite all of the negative headlines, higher rates, and price challenges, 22% of Millennials still plan to buy in the next 12 months. Your job is to locate and endear yourself--as a relationship that begins well before the specific "exploring" stage of Millennial customers' journey--to the hundreds of thousands of young adults who see themselves somewhere on that path.
  2. Factors of down-payment ability, monthly payment plans, and the asking price switches and levers you can press will be more significant for those Millennials whose intention are to become homeowners in the next year.
  3. Macro data point on how big a hit student debt is in the homeownership grand scheme of things introduces a host of micro data points of opportunity for you. Underneath broad arching negative trends always lie pockets and veins of rich quarry.

There's no time like now to get a data fitness check-up and make sure yours is as healthy can be so that you can be more nimble than others in adapting to choppy, shifting ground in the months ahead.