San Diego Realtor Linda Moore looks at the contributing factors behind the Millennial Generation and why they are less active in the housing market.
Many factors are contributing to the Millennial generation, sometimes referred to as Generation Y, not being as active in home buying as previous generations. In 2012 it was reported by the Federal Reserve that only 9% of those aged 29 to 34 received a first-time mortgage in between the years 2009 and 2011, a number that was 50% lower than just a decade before. In addition, an analysis of Census Bureau data performed by the Pew Research Center found that 36% of those aged 18-31 are living with their parents. Why is this the case for this generation? Let’s take a look.
A wide range of financial issues are certainly contributing to this generation either choosing to rent or living with their parents in order to save up to purchase a home further down the road. In an article from Forbes, several factors are mentioned such as unemployment rates that are twice as high for those in their 20s, student loan debt outpacing credit card debt for the first time in history and handicapping their ability to get a home, and the fact that many recent graduates find themselves in an endless sea of work that is temporary, contract work, or low paying internships before being able to get significant work in their field.
In addition to finances, certain attitudes have changed for this generation that may be impacting their beliefs on home ownership. In an article for Dreamtown, a Chicago real estate website, it is noted that the typical path to adulthood has changed for many younger adults; marriage is no longer compulsory (in fact the median age of a first marriage is up 6 years from the Baby Boomer generation), many do not see renting as a stop-gap endeavor to ownership as in previous generations, and changing attitudes about living at home longer with parents.
Will things change for the Millennials now that housing is on a more even path than in recent years? Time will tell if finances and attitudes will continue to keep this generation living at home or renting into the future.