Homeownership is eluding millions of millennials for a whole lot of reasons including personal preferences and economic disadvantages, that explain why the homeownership rate for the largest generation in U.S. history is lower than that of their parents and grandparents.
Millennials are in less of a rush to get their hands-on house keys, with delayed marriage being one of the major impacts on their low homeownership rate for millennials. Marriage increases one’s likelihood of owning a home by 18 percentage points.
Yet millennials are wedding later and less often. In 1960, the average age at which women and men first married was in their early to mid 20s. Today, the median age for a first marriage is closer to 30.
To be sure, even without saying, “I do” many young people still want to become homeowners. Unmarried couples accounted for 16 percent of first-time homebuyers in 2017, the highest share on record, according to the National Association of Realtors. Single men and women accounted for a quarter of first-time homebuyers. Today, just 57 percent of first-time homebuyers are married, compared with 75 percent in 1985.
Young people are also in no rush to have kids. The share of married households with children, aged 18 to 34, dropped to 25 percent in 2015, from 37 percent in 1990. And having a child increases a person’s chance of owning a house by 6 percentage points, according to researcher at the Urban Institute.
The unprecedented student debt millennials take on also reduces their chances of landing in a home of their own. Researchers at giant mortgage company Freddie Mac recently found that more than half of workers employed in the “essential workforce,” including in fields such as health care, education and law enforcement, have made their housing decisions based on their student debt.
If a person’s education debt went from $50,000 to $100,000, their chance of homeownership declined by 15 percentage points, the Urban Institute found.
Millennials are also renting for longer in locations that tend to be pricey, making it harder for them to save up for an eventual down payment. Nearly half of households headed by people ages 18 to 34 are rent-burdened, meaning that more than 30 percent of their paycheck goes to their landlord.
Although industry experts predict that homeownership rates for millennials to pick up as they get older, the fact that they’re buying homes later than previous generations means, they are building wealth much, much more slowly than previous generations did.
by Jamie Barrie