The homeownership rate for millennials is 8 percentage points lower than for Gen Xers and baby boomers when they were millennials’ ages, according to the Urban Institute’s “Millennial Homeownership” report. Younger generations are struggling to obtain homeownership at the same rates as their parents. The Urban Institute estimates that 3.4 million more people would be homeowners if the rate of ownership kept pace with previous generations.
Millennials are the most educated generation in the nation’s history, but student loan debt is hampering their ability to save for down payments. The Urban Institute’s research suggests that it takes only a 1% increase in a person’s student loan debt to decrease the likelihood he or she will buy a home. The median amount of debt millennials hold is $19,000, which is higher than the $12,800 average debt that Gen Xers had at the same age.
Coupled with that, millennials are renting longer than previous generations and paying higher housing costs, which has led analysts to consider many of them “rent-burdened.” A person is rent-burdened when they’re spending more than 30% of their income on housing.
Millennials are delaying marriage, too—another factor decreasing their probability of purchasing a home. The median age for marriage has moved from early-20s in 1960 to late-20s today.
Still, the remote-work trend during the COVID-19 pandemic may push many millennials who need more space toward homeownership. They’ll face higher home prices in the suburbs, but down payment assistance programs can help.
Realtor.com®’s 2021 housing forecast predicts that millennials will shape the market in the new year and outnumber Gen Xer and baby boomer buyers and sellers.
“Older millennials will likely be trade-up buyers, while the larger, younger segment of the generation age into their key homebuying years,” the report notes. Gen Z, the youngest generation, is also expected to emerge in larger numbers in 2021 and compete with millennials for a limited number of entry-level homes.
Source: “Buying a Home: Why It’s Harder for Younger Generations Than Their Parents,” CNBC (Nov. 25, 2020)
