Investing icon Peter Lynch used to say that some of his best stock ideas came from observing everyday trends in stores and on the streets.
Michael Mattioli, a portfolio manager with John Hancock Asset Management, thinks he’s found one. He’s been going to a lot more weddings lately. To Mattioli, a millennial in his early 30s, that means at least one thing: They’re going to buy homes. And demographic experts agree with him.
Once bashed as “the lamest generation” by The Daily Beast, millennials have been ridiculed for being too self absorbed to consider getting married and raising a family. But that’s about to change. Millennials are about to “grow up” and start moving out of their parents’ homes.
If more millennials will be tying the knot, as Mattioli is already observing in his own personal life, this trend will boost housing sales over the next few years. That will help the shares of Lennar L, +0.94% NVR N, -0.01% Lowe’s LOW, +0.01% and Tempur Sealy TPX, +2.33% which Mattioli owns in part as a play on this trend.
“Millennials are leaving the basement,” Mattioli says.
To see why, I recently checked in with Samuel Sturgeon, an expert in marriage and fertility trends at Demographic Intelligence, which publishes the U.S. Wedding Forecast. Here are three key factors creating a dynamic that explains why a lot more millennials will be getting married and buying homes over the next few years, creating a housing boomlet that you can invest in now.
1. Millennials are the most educated generation in U.S. history (thanks to the achievement of females in the group), and college-educated people are more likely to buy homes.
2. College-educated millennials start getting married in big numbers at age 25-26 and beyond.
3. The two biggest age cohorts among millennials, the bulge in the python, if you will, are now 24 and 25 years old.
Add it all up, and here’s the key takeaway: The biggest chunk of millennials who are more likely to buy homes are just now moving into their prime marriage and home-buying years. This will put a fresh bid in the housing market for the next several years.
“The reputation of millennials is that they are putting off marriage and taking too long to grow up,” Sturgeon says. “But we are at the front of a big wave of millennial marriages,” he says.