The decision to delay homeownership could have some unexpected effects on younger generations, especially Millennials. According to the Urban Institute (UI), the Millennial generation’s move from renting to homeownership has been “sluggish,” which could create problems for these individuals far into the future. In fact, UI relates lower rates of homeownership to a variety of other issues later in life, including “greater wealth disparities” in the Millennial population.
Millennials’ homeownership rates have long been an area of concern for economists. UI cited several reasons for the generation’s delay into homeownership, including other delays, such as getting married and having children. The institute also cited “rising student debt…and increasing rents that are making it more difficult to save for a down payment.”
Millennial Homeownership by the Numbers
A recent study by UI indicated homeownership rates for Millennials was about 37% in 2015. That is 8% lower than both Generation X (Gen X) and the Baby Boomers in the same age bracket. The institute noted Millennials tend to have far greater educational debt than Boomers did at the same age and, in most cases, more than Gen X as well. “A 1% increase in education loan debt decreases the likelihood of owning a home by 0.15 percentage points,” warned the researchers.
Millennials are “Choosing to Rent”
Although UI did cite a number of reasons that Millennial homeownership may be delayed for practical reasons, there are also several reasons outside of financial limitations that may contribute to falling homeownership rates in this generation.
“The preference of educated Millennials to move to more expensive urban centers has contributed to their lower homeownership rate,” pointed out UI analysts. The group also noted that the generation as a whole has “a slight attitudinal change toward homeownership.”
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