The Millenials will return to the housing market at some point in time. The lack of participation by the Millenials (young first-time buyers) is among the biggest challenges being faced in the housing recovery. The main the Millenials are missing is the fact that they were the hardest by the recession.
On one hand, the predilection for millenials to go on renting rather than invest in the purchase of a home has been linked to their tendency not to stay put for very long, and there is some truth to this. But it also comes down to pure purchasing power: millenials simply do not command the kinds of financial resources that previous generations have had access to, and this clearly must have an impact on millenials' ability to purchase homes.
Many millenials like the disposable income and freedom they have with renting, they don't want the mortgage and to be tied down unless they can afford to buy outright. Times have changed and with the experience of the housing crash, they don't want to end up with houses that may go into negative equity.
No, Millenials will not return to the housing market. With unemployment still high and finding a job more difficult than ever, millenials will have a lot of trouble looking for a house, with the cost of houses so high. Difficulties being able to afford a house in the struggling economy will serve as a deterrent to anyone considering buying a house, especially since housing costs are so high.