July 18th, 2014
Despite what many reports have said about millennials having a small presence in the housing market, middle-aged buyers are the group with declining numbers.
The latest Census Bureau homeownership and National Association of Realtors first-time homebuyer reports seem to show that younger Americans aren’t as interested in homebuying. However, according to Trulia Chief Economist Jed Kolko, homeownership among young adults actually started to increase in 2013, bringing their activity to pre-bubble levels. The numbers for middle-aged buyers, on the other hand, are slipping. Kolko said that the Census data in particular is painting the wrong picture.
“In fact, homeownership among young adults is both on the rise and not too far off from where demographics say it should be,” he said. “To see this, we did two things in this analysis: (1) account for changes in household formation to get a true measure of homeownership, and (2) adjust for longer-term demographic shifts to compare homeownership levels today with pre-bubble levels.”
After bottoming out in 2012, the homeownership rate for young adults took off in 2013, roughly matching levels in the 90s, when adjusting for significant demographic shift among young adults. On the other hand, homeownership for 35 to 54 year olds is lower than it was previous to the housing bubble, even after making similar adjustments.
Who’s to blame for the slow recovery?
Many fingers have been pointed at millennials as the source for the snail pace of the housing recovery. Not only are they faced with high amounts of student debt, but they are also putting education above homebuying and other traditional major life goals, such as marriage. The Associated Press reported that Lawrence Yun, chief economist at the National Association of Realtors, said that weak home sales activity among this group is why the U.S. real estate market hasn’t picked up at a faster speed.
“It’s principally the economic factors: jobs and student debt,” Yun said.
Kolko’s research disagrees, as he said that millennials today are just as likely to own a home as people of the same age bracket in the 90s. He also said that their attitudes toward homeownership are not different now, as many want to purchase a property in the future. What has held true is that young Americans are purchasing homes later in life because more people in this generation are going to college and graduate school before they decide to settle down.