Millennials make up an increasingly small percentage of homeowners, and members of every generation should be concerned. That’s the conclusion drawn by the Federal Reserve and the Economist in a special report summarized earlier this year by the Philadelphia Inquirer.
In 2019, millennials (with a median age of 31), owned just 4% of homes. By comparison, Baby Boomers, whose median age was 35 at the time, owned nearly 33% of homes in 1990. Generation X has also fared better than millennials, owning 20% of homes by the time they were 35.
While millennials still have a few more years to go before their average age hits 35, the Federal Reserve predicts they won’t come close to the 20% or 33% market share enjoyed by prior generations.
Millennials' low homeownership rates can be attribute to two things:
- Millennials’ debt burdens, due in large part to student loans.
- Increasing home prices, particularly in large metro areas, intensified by strict land use and zoning policies.
Lagging millennial homeownership rates and increasing home prices spell bad news for both millennials and the economy at large. As baby boomers age, they’ll likely want to downsize and sell their current homes. Unless homeownership rates among millennials rise significantly, there may not be enough younger households able to purchase these homes. This may leave baby boomers with fewer options available to them and create ripple effects throughout the entire housing market. Read more about this phenomenon in our previous blog post.
COVID-19 and Millennial Homeownership
COVID-19 and the resulting financial turmoil will likely have a long-term effect on millennial homeownership rates, but we don’t yet know what that effect will be. Several studies, including this one by the Pew Research Center, show that millennials have been hit harder in many ways by the current financial situation than older generations.
For example, 45% of adults under 30 report that they or someone in their household has lost income due to COVID-19, compared to 39% of adults 30-49, 32% of adults 50-64, and 18 percent of adults 65 and older. Millennials whose income has been significantly affected by COVID-19 will likely have to put their dreams of homeownership on hold.
But Kristin Messerli, a columnist with HousingWire, is optimistic about millennial homeownership rates in the long run. She predicts that COVID-19 may become a driving force of millennial homeownership in the future because more millennials may be drawn to the sense of stability and security that homeownership can provide.
The Continued Importance of Down Payment Assistance
While it’s too soon to predict COVID-19’s long-term impact on homeownership, we do know that down payment assistance programs like TSAHC’s will be more important than ever. In addition to helping home buyers overcome the most significant obstacle to homeownership (the down payment), these programs can also help home buyers keep more of their hard-earned savings for repairs or other expenses down the road. Click here to learn more about TSAHC’s programs.
On the House blog posts are meant to provide general information on various housing-related issues, research and programs. We are not liable for any errors or inaccuracies in the information provided by blog sources. Furthermore, this blog is not legal advice and should not be used as a substitute for legal advice from a licensed professional attorney.