Millennials: We Don’t Want to Be Renters
November 28, 2017
Though many are stuck renting out of financial necessity, millennials show the same desire for homeownership as their parents and grandparents—and traditional suburban properties appeal to them more than renting or buying in cities, Bloomberg reports.
Many economists have acknowledged that the slow path to homeownership for young adults is contributing to record-low homeownership rates. But for two consecutive quarters, the homeownership rate among those ages 35 and younger has been on the rise. Some economists predict that millennials will eventually own homes at similar rates as their parents.
Rents, however, are taking a bigger bite out of household budgets, making it difficult for young adults to save enough for a down payment. Student loan debt is also delaying homeownership by up to five years, according to a 2016 study by the National Association of REALTORS®. Millennials also have less job security than prior generations, and their careers are more likely to require relocation.
“You go back 20 or 30 years, people would get a job in their late 20s, early 30s, with the idea that they might work there until retirement,” Dean Baker, codirector of the Center for Economic and Policy Research, told Bloomberg. “People aren’t in that boat today.”
Young adults who are ready for homeownership are also facing a shortage of homes in the market. “The result is that price gains continue to exceed income growth through scarcity, particularly in that smaller home market, which is the hardest market for a builder to essentially reach and build to these days,” Robert Dietz, chief economist at the National Association of Home Builders, told Bloomberg.
Overall, though, economists seem to be upbeat about millennials. They’re getting married and having children later than their parents did, but they are starting to “cross barriers typically associated with buying,” Bloomberg reports.
“Right now, probably a third of our housing business is young couples coming out of the apartments,” Chris Nelson, a builder in Simsbury, Conn., told Bloomberg. “We really think that’s just the beginning—that over the next three to five years, we’re going to see a ton of people coming out of the apartments, buying homes.”
Source: “Millennials Want to Own Homes Too, if U.S. Economy Would Consent,” Bloomberg (Nov. 26, 2017)
Updated: July 13, 2018