Data suggests the young adult homeownership rate is stabilizing
After decades of decline, the 25-to-34-year-old homeownership rate has begun to level out, seeing no significant decline in 2014, according to Fannie Mae’s Housing Insights report.
That trend, according to the report, could result in a revival of active young adult homeowners, and could create a demand for more starter homes and the services/technology to aid them in their home search.
More Millennials in housing would be a big deal. Even a stabilized young adult homeownership rate during the second half of the decade, Fannie Mae found, would result in larger gains than those seen during the housing boom, thanks to an increasing young adult population. An increase of 1.5 percent per year in the young adult homeownership rate until 2020 would return it to the long-term trend line established by the 1980-2010 census, although that would still be 6 percent below its recent 2004 peak.
The Problem of Post-Student Living
Young adult homeowners have been a topic of concern in real estate circles, considering that thus far, Millennials have been largely absent in housing. This has been attributed to many economic factors. Student debt is one of the larger factors cited – according to a recent Bankrate survey, 30 percent of Millennial home purchases have been delayed because of high student debt. Another factor is lacking wage growth, which hurts Americans across the board, but especially Millennials. According to a report by The Atlantic, wages for 25-to-34-year-olds are down by nearly 15 percent in some lines of work since 2007. The only area that saw growth was a very modest 0.2 percent gain in healthcare, which is not even enough to keep up with inflation.
Because of those economic trends, 31.5 percent of 18- to 34-year olds are living at home with their parents. Since 2005, increasing numbers of young adults have been living at home – 2015’s number is the highest level since 1940 – and some analysts, including former Trulia Chief Economist and VP of Analytics Jed Kolko, have argued that such rates may be a new normal, and that young adult homeownership may never return to its previous levels.