Home owning sinks to its lowest rate in 51 years – no surprise to Millennials
The proportion of U.S. households is decreasing, particularly among younger people, due to increasing property prices, high rents, sluggish pay and intense student debt.
Fewer and fewer Americans are owning their homes, with the proportion of US households that own their own house matching its lowest level in just over half a century, the US Census Bureau said Thursday – although the reasons behind the trend are likely quite different than in 1965, the last time the rate crept this low.
62.9 percent of households now own a home, compared to 63.4 percent a year ago. The highest rate to date, 69.2 percent, was recorded in 2004.
The decrease is attributed to more expensive property prices, high rents, and stagnant pay. Millennials, the generation now roughly between ages 18 and 34, are particularly less likely to be owning homes: in the past year, their home ownership rate fell by 0.7 percentage points. Experts believe high apartment rents and intense student debt are making it more difficult for Millennials to purchase homes.
More and more frequently, renters are banding together in rental households, Ralph McLaughlin, the chief economist at the real estate website Trulia, told the Associated Press.
But the decision to rent, whether alone or with roommates, may be based on more than financial necessity. Many Millennials, in particular, simply don't seem interested in owning homes.
"Instead of venturing off to live independently, or pairing up (married or just cohabiting), more than half of all millennials now opt for some kind of 'untraditional' living relationship once they reach adulthood, sharing their living space with a non-partner," The Guardian reported in May. "It's no surprise that the cities with the biggest affordability problem have been those to see the biggest boom in 'adult dorms', or 'co-living' projects, in which residents have their own small rooms (sometimes shared) and then large, common spaces, such as kitchens and living rooms. Think of a cooler, Millennial version of Friends."
Mom and Dad are popular options, too: for the first time in 130 years, living with their parents is the most popular living arrangement for people aged 18 to 34.
"This is the first time in the supply history of housing where, for whatever reason, a giant new generation is not being served," G.U. Krueger, a Los Angeles housing economist, told the Los Angeles Times. "To me, it's incomprehensible."
However, others argue millennials aren't buying homes because they can't afford them, not because they love their roommate or renting lifestyle. Their financial challenges, of course, aren't unique. Although many Americans retain the dream of owning a home, there are many obstacles, as The Christian Science Monitor reported last month.
Home prices have outpaced average gains in earning: the median home sale in June, for example, was for $247,700, up 4.8 percent from June 2015: about double the rate of hourly wage gains.
But Millennials are also more likely to be older when they hit life milestones that traditionally come before home ownership, such as getting married or moving away from parents. Experts believe many of those young workers will eventually look for a home when the time is right.
To make sure house-buying will one day be within reach, financial advisors recommend Millennials consider living with their parents for a few more years, securing a second income stream, saving money by spending less, paying off debts, and improving their credit score.
This report contains information from the Associated Press.