WASHINGTON – Don’t blame the millennial generation for lackluster home sales.
They are increasingly ethnically diverse, more educated and less likely to be married – all factors that make them less likely to own a home, said a report released Wednesday by Trulia, an online real estate company. After adjusting for these population changes, younger Americans are actually buying homes at the same rate as they did during the late 1990s.
For at least the past 20 years, there have been significant demographic headwinds for homeownership for young people, said Jed Kolko, chief economist at Trulia.
The analysis suggests that the recession – for all its damage to the economy – did little to turn off millennials from the idea of owning a home compared with previous generations. In fact, the report shows that the major group whose ownership rates suffered because of the downturn is middle-aged Americans.
The easy credit offered during the housing bubble caused more young people to buy than they would have otherwise, and that masked the effect of the demographic changes, according to Trulia. The bursting of that bubble and the resulting recession that began in 2007 then caused ownership to fall where it should be, given the demographic shifts.
Because a greater percentage of younger Americans are attending college and graduate school, they are settling down a few years later – which causes them to delay buying a home.
Census figures show that the share of 18- to 34-year-olds who are married is 30 percent, down from 47 percent in 1983. Just 29 percent of them live with children, compared with 39 percent three decades ago. Since more people in the age range are single and childless, Trulia looked at the number of homeowners who are also identified as the head of their households. After adjusting for these population shifts, the share of people younger than 35 who own homes is the same as it was in 1997.
Standard census data, which aren’t adjusted for these factors, show that the ownership rate among those younger than 35 has declined to 36.2 percent from 38.6 percent in 1997. Slightly less than 65 percent of the country own a home, down from a peak of 69 percent in the middle of 2006.
While the weak economic rebound has affected home buying, Trulia’s analysis puts more of an emphasis on demographics to explain poor sales.
Lawrence Yun, chief economist at the National Association of Realtors, blames the lack of buying among younger people on the sluggish recovery.