Despite there being 66M Millennials in the US, only 43% of Millennials are current homeowners.

Millennial Generation Has Lowest Homeownership Rate of Any Generation

Just 43% of Millennials are current homeowners even though Millennials currently represent the biggest slice of the American population pie.  That Millennials (born between 1981 and 1996) have the lowest homeownership rate among all generations is fairly staggering given the size of this demographic, 66M.  This 43% is also significantly lower than the overall American homeownership average of 65%.

A newly published study by Legal & General found that the median age of first-time buyers has gone up to 33 years, an increase of +14% since 1981.  Likewise, within this same time frame, the average age of all homeowners has jumped from the early 30’s to 55 years when considering both second home purchases by Boomers and first-home buyers.

In August, according to the National Association of REALTORS® (NAR), first-time buyers executed only 29% of existing home sales.  This 29% of first-time buyers is below the 5-year average of 32% plus it’s the lowest percentage of first-time buyers since January 2019.

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Underlying Problem and Cause of Low Homeownership Rates is Income

The Legal & General study indicated Millennials face very tough financial circumstances.  This study points to the combined effects of stagnant income growth over the past four decades and record-rising home prices.  And, with “home wealth” often inherited, Millennials who lack home equity could render the current wealth gap worse and for multiple generations.

This seemingly endless wage stagnation makes it more and more difficult for Millennials to keep up with increases in everyday costs, let alone Millennials keeping pace with escalating home prices.

The Economic Policy Institute (EPI) has determined that the minimum wage is now worth -17% less than it was 10 years ago and -31% less than what it was in 1968.  The EPI stated, “If the minimum wage had kept pace with productivity since 1968, the minimum wage would be $24 now.”

Even if/when companies increase wages, the EPI stated, “It is still doubtful that it would constitute a broad enough change to bring younger workers in line with the galloping cost of housing.”

Another bad sign for this lagging homeownership rate among Millennials – Legal & General found that only 48% of Millennials were saving for a down payment.

First-Time Home Prices vs. Millennial Income

The good news is that average Millennial income has increased +24% since 2012.  The bad news is that housing prices have increased +86% regardless of home price tier, home type, and/or location.

According to NAR, the median price of a starter home in 2019 was $215,000.  The average price of that same starter home in January 2021 was $269.039, according to Zillow.  Home prices have jumped +19%, according to CoreLogic, in July 2021 following an +18.7% rise in property valuations in June 2021.

Home Affordability is Key Issue Affecting Millennial Homeownership

This latest study published by Legal & General puts forth some startling data concerning Millennial homeownership.

Not only are skyrocketing housing costs coupled with stagnant wages lowering the rate of Millennial homeownership, delayed lifestyle decisions concerning marriage and family formation plus student loan debt that affects 14.8M Millennials also contribute to such low rates of Millennial homeownership.

Likewise, this latest study published by Legal & General also asks tough questions about Millennial homeownership rates that industry experts avoid answering.  One such question is, “With the current trend that more and more people are unable to afford homes, how will this affect the wealth gap for future generations?”

Thanks to Lega l& General, the National Association of REALTORS®, Zillow, CoreLogic, the Economic Policy Institute and National Mortgage News.


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