Missing millennials: Housing market hindered by absence of 2M young adults
- According to a new National Association of Home Builders report, as of 2014, more than 20% of young adults ages 25 to 34, or 8.8 million, lived with their parents or parents-in-law, up from 12%, or 4.6 million, in 2000. If homeownership of young adults currently reached 2000 levels, there would be two million more households of young adults who could play a significant role in the housing market.
- The NAHB cited the trend of young people choosing to marry and have children later in life and the lack of income growth as reasons for the generation staying at home longer. Factors not affecting how long young people remained at home, however, are college enrollment and the changing ethnic and cultural make-up of young adults, according to the NAHB.
- The NAHB report indicated that the income required for independent living and for owning a home has increased, leaving many young adults with sluggish incomes at home with their parents.
Even among those who do move away from home, the NAHB found a shift away from homeownership and toward renting, with homeownership rates for the 25-34 age group at 37% in 2014, down from 47% in 2006.
The NAHB also found a widening income gap between young people who own a home, the top earners in their age group, and those who live with their parents. In addition, those who still live at home are twice as likely to be unemployed and the demographic in general has registered no growth in median income since 2000.
While not every age group faces such dismal income levels, conditions certainly aren’t ripe for a significant portion of potential homebuyers. In particular, rising rents are making it increasingly difficult for people to save for down payments, and first-time buyers — the group mostly likely to be burdened with student debt — represent only one-third of the housing market, the lowest share in 30 years.
In addition, Zillow has predicted that in 2016, due to all of these factors, homeownership will be entirely out of reach for the bottom one-third of wage earners.