Why Millions of Millennials Cannot Become Homeowners
Homeownership continues to elude the millions of millennials, according to one new report by the Urban Institute. The report lists a host of reasons which explain why the rate of homeownership is so dismally low among the largest generation of USA today, so low in fact, that their grandparents and even their parents beat them in numbers. Some just believe that it is a personal preference, while others might blame the prevailing economic climate of the country which isn’t exactly conducive for buying homes.
Baby Boomers and Gen Xers are winning
In the happy times of the baby boomers, the case was that people bought a house as soon as they could. Even if owning and paying or a house meant that you couldn’t go on a vacation for years to save up for your first house’s down payment. But the millennials seem to be in no hurry to have their house keys handed over to them.
The survey showed how many respondents has bought their house between the ages of 25 and 34. The respondents were divided in 3 categories; Baby boomers (born 1946-64), Gen Xers (born 1965-80), and Millennials (born 1981-97). 45% of the Baby Boomers already purchased their first house by the age of 25 to 34. The number was higher for the Gen Xers, with 45.4% having bought their homes during the age bracket. With a low 37%, very few millennials were able to buy houses when they were between 25 and 35 years of age.
Why the low score?
This has one of the biggest impacts on house ownership. As marriage increases the likelihood of people settling down, the need to own a house is also felt. But the millennial generation is getting married later on in their lives, and some even choose to forgo marriage altogether. In the 1960’s, the usual age for men and women to marry was when they were in their early 20’s. Now, the median age for the millennials first marriage is closer to 30. The millennials are also three times as unlikely to ever marry when compared to their counterparts from the 1970’s and 1980’s.
Delaying having children
Similar to the laid back attitude of marriage, the younger generation is in no tearing hurry to have kids, either. Where in 1990, 37% of the married households had children aged 18 to 34, the number dropped to 25% in 2015. According to the researchers, the chances of owning a house are said to increase by 6%, if you have kids.
Millennials are far more heterogeneous than their previous generations, and among some groups, home ownership is particularly low. Populations of Hispanics, Asian Americans and African Americans own lesser homes than White Americans, as the study found out. For instance, about 39% of the white millennials between the ages of 18 to 34 own their home and only 14.5% of African-Americans are homeowners.
The huge student loans that most millennials have to take on, significantly reduces their chances of owning a house. The good folks at the Urban Institute found that if a candidate’s education debt rose from $50,000 to $100,00, his or her chances of owning a house fell by 15%. The poor credit scores also limit their chances of taking home loans after taking out an education loan. Another interesting find was that people who have a college degree are far more likely to own a house than those who did not. This could be due to rising rents and unstable incomes.
Sky High Rent
Millennials prefer to stay in more pricier or ‘cool’ locations and neighborhoods, which would ultimately reflect in the poor savings and not being able to make down payments for their own houses. According to the survey, 30% of the paychecks of people between 18 and 24 went towards meeting their rent. The number of millennial homeowners was 10% more in case their own parents were homeowners, when compared to the millennials whose parent were not homeowners.
Barriers to home-ownership
Some other responses given by those millennials who were surveyed, really sum up the reasons why they just cannot afford homes of their own. 53% said that they could not afford the down payment, 33% did not qualify for any mortgage, 28% found that it was way more convenient to just rent a house, 26% said it was more cheaper to rent, 24% said that they plan to move soon anyways, 24% specifically said that they always prefer to rent homes they live in and finally only 11% said that they were looking to purchase a house.
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