Millennials are nearly 10 percent less likely to be homeowners than baby boomers or Gen Xers. What’s different about this generation of homeowners?
Urban Institute’s comprehensive study on Millennial Homeownership found that Millennials are 8 percent less likely to be homeowners than baby boomers and 8.4 percent lower than Gen Xers in the same age group. Millennials are less likely to be homeowners because, according to the study, “Millennials have different characteristics and preferences from earlier generations.”
What are those differences?
- Marriage among young adults age 18 to 34 has fallen from 52.3 percent in 1990 to 38.5 percent as of 2015. Delaying marriage and childbearing, life changes that frequently lead to homeownership, factor into the drop in generational homeownership.
- Millennials prefer city living. It costs much more to buy a home in more urban environments and that also puts homeownership for Millennials that much further out of reach.
- Highly-educated homeownership among Millennials has fallen 5 percentage points compared with baby boomers or Gen Xers. This is likely because of the $1.4 trillion of student loan debt. (Read an article I wrote on how student loan debt specifically affects Millennial homeownership.)
- Although Millennials are a more racially and ethnically diverse generation, minority homeownership rates are almost 15 percent lower than white households. The report believes this continued disparity might have something to do with, “how the intergenerational transfer of wealth and homeownership has contributed to the persistent homeownership gap across race and ethnicity.”
External barriers that also deter Millennial homeownership are high rental costs, difficulty in obtaining mortgages, the lack of affordable housing and of course, education debt.
To raise Millennial homeownership, the Urban Institute recommends policy changes that enhance financial knowledge and homeowner awareness, streamline and increase the efficiency of the mortgage process, include rental and utility payment history data to comprehensively evaluate creditworthiness and change land-use and zoning regulations to allow for more construction.
It would also help if we could figure out how to really help Millennials pay down their student loans. Have you seen this game show?