New data from the Urban Institute shows that millennial’s are waiting longer to purchase their first home than past generations.
This study shows that the homeownership rate for millennial’s was 37 percent in 2015, or about eight percentage points lower than that of the two previous generations (Gen X and Baby boomers) at the same age (25 – 34).
There could be a lot of reasons for millennial’s to not make the financial jump into home ownership as quickly as their parents did before them. Student debts, the rise in the cost of living and being firsthand witnesses to the last property crash could all be influencing factors.
Taken from the Urban Institute report here are the 5 main reasons why millennial’s are taking longer to get on to the property ladder;
- Delayed marriage: Being married increases the probability of owning a home by 18 percentage points, after accounting for other factors such as age, income, race/ethnicity and education. If the marriage rate in 2015 had been the same as it was in 1990, the millennial home ownership rate would be about 5 percentage points higher.
- Greater racial diversity: Because non-Hispanic white households have higher homeownership rates than all other racial groups, the increasing diversity of millennial’s contributes to the lower homeownership rate as well. If the racial composition in 2015 had been the same as it was in 1990, the millennial homeownership rate would be 2.6%.
- Increased education debt: A 1 percent increase in education loan debt decreases the likelihood of owning a home by 0.15%.
- Increased rents: A 1 percent increase in a household’s rent-to-income ratio decreases the likelihood of home ownership by 0.07%.
- Delayed child bearing: For those who are married, having a child increases the probability of owning a home 6.2%, after accounting for other factors such as age, income, race/ethnicity and education.
If you are a millennial who would like to get a jump start to owning your own property and have questions – reach out! We are passionate about arming people with knowledge and about the benefits of being a homeowner.