Home ownership for 18-34 year olds is the lowest it’s been in 30 years. From 1960 to 2014 the number of cohabiting, married/in charge of their own household dropped from 60% to 32% according to Pew Research Center. So, why aren’t millennials buying homes? Is there a good reason and is it a bad thing?
Millennial Murderers
Millenials are usually blamed for killing industries but, this one is not just on them. A combination of reasons such as Baby Boomers and Gen X holding onto properties and looming student loan debt contribute to the hesitance of millenials to buy homes.
Reasons They’re Not Buying
There are plenty of reasons why millennials aren’t buying properties. The reasons are both financial and societal which means that there is no one solution that would be a perfect fix. A short list of reasons include:
- Too much student loan debt to take on a mortgage.
The vast majority of millennials are shackled by student loan debt. This debt can affect their ability to make big financial commitments like purchasing a property. - Post recession market still sucks.
Although the market has been improving it is still struggling from the recession in 2007. This can affect an elderly parent or grandparents ability to live alone. The solution is often cohabitation. - Old people aren’t selling homes.
- Choose to invest in other things
A house may have been a great investment in years past but, the trend in this generation is to invest in other things like education and profession. - Allows them the ability to move for jobs with ease.
- Choosing to delay life.
This is especially the case with wealthier millennials. Their pursuit of degrees, late start to careers, and delay on financial stability means that they are putting off marrying and having children until later. - Cost of property Vs income
The cost of a property relative to income is not as low as it was in prior generations. This means that a non-college educated person say in the 1970s would be more able to purchase a house than their counterpart in 2018.
Where are millennials living?
Millennials, especially those early in their careers, find themselves either living with roommates or with parents (or grandparents). This applies to low income non college educated millennials as well as their middle class counterparts. Poorer millennials are staying because they can not afford to move. Middle class millennials are staying to allow more financial flexibility.
Although the reasons are a little different for each group both suffer from the the inability to purchase properties like their generational counterparts before. Price of properties versus their income have forced millennials into living situations where cost of living is split which provides them more financial freedom.
Don’t Panic Yet!
Yes, millennials are buying homes at a lower rate than their predecessors but that’s no reason to panic. The state of the economy, student loan debt, and job market are all factors that contribute to this trend. Forgiving student debt is one approach that may help increase millennials home ownership. This solution is especially popular among democrats.
Other options include a cap on housing prices. This is a fix that would work best with an increase in minimum wage as it would contribute to more stable housing prices. Activists have been pushing for both and have recently succeeded in getting minimum wage increased across several states. This coupled with millennials aging may lead to increase millennials home ownership in the next 8-12 years as millennials enter their later stage in life.
So, no need to panic. They’ll be buying homes soon especially if the student debt is eased by the federal government.