Don't Blame Lagging Home Sales on Millennials

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
couple standing in front of new ...
ShutterstockA greater number of younger Americans are settling down a few years later -- which causes them to delay buying a home.
By Josh Boak
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 new report released Wednesday by Trulia, the online real estate firm. 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

The easy credit offered during the housing bubble caused more young people to buy than they otherwise would and masked the impact of the demographic changes, according to Trulia.

of owning a home compared to 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 otherwise would and masked the impact 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 18-34 year-olds who are married is 30 percent, down from 47 percent in 1983. Just 29 percent of them live with children, compared to 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 under 35-years old who own homes is the same as it was for 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 owns a home, down from a peak of 69 percent in the middle of 2006. While the weak economic rebound has affected homebuying, Trulia's analysis puts more of an emphasis on demographics than much of the real estate industry has 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, now entering its sixth year.

"It's principally the economic factors: jobs and student debt," said Yun, noting the difficulty of saving for a down payment when earning modest wages and repaying college loans.

The number of first-time homebuyers in May was near record lows at 27 percent, versus a historic average of 40 percent, the Realtors said last month. Yun says that as the economy continues to bounce back, so, too, will sales to first-time buyers.

By contrast, Trulia found that homeownership really lags among a different age bracket: the middle-aged. After adjusting for demographic changes, it found that their ownership rate was the lowest since 1976, a clear casualty of the housing bust.

That's because many Americans who are now middle-aged bought during the bubble at inflated prices with loans that they could not repay.

"It's the 35-54 year-olds who have fallen further behind," Kolko said.

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
gdhuman

Hooray for the Millennials! Maybe they've figured out that we're being fleeced, with costs at historically outrageous (even after the bubble partially deflated) multiples of annual income. I've attended a few first time homebuyer's seminars and what should be a beggar's banquet looked more like a vulture's picnic.
First, there was the banker who tried to convince us that they really and truly care about whether or not they write loans to people who can pay them back. Overhearing them speak among themselves I heard that they were hot for conforming loans. They have no skin in the game as long as they're not fraudulent.
Then there was the real estate agent who insisted that now was a great time, nay, a fantastic time to buy a home! Of course the National Association of Realtors has been saying that all along, even when the market was poised to plummet. The NAR, folks, has successfully lobbied for gutted capital requirements for banks thereby setting us up for a repeat of the chaos of '08. Three cheers for realtors!
Next up are the insurance guys. They stay away from discussing things like payout ratios and the like, instead preferring to engage in fear mongering - the insurance companies are keeping more of the consumer's money than ever and delivering less while delaying payouts. This guy droned on about the one house in 2 decades of writing policies that was a total loss. I'm not sure anyone else thought about the low odds vs the cost.
I could go on and on but my space is limited. I could talk in detail about the broker who decided to go up a 1/4% at the closing table until I threatened to walk, the consumer loan officer who assured me that there was no prepayment penalty and then had the nerve to tell me, when I read the paperwork and questioned the fact that I was on the hook for the entire amount of interest, that "there is no prepayment penalty - we don't charge you extra for paying us back early". This is just the tip of the iceburg. I could discuss tricks lawyers play too.
The one thing that strikes you when you watch these people interact is what a tight group they are. It reminded me of a pack of wolves with the (very) occasional voice of honesty present.
And that's all I have to say.

July 16 2014 at 7:30 PM Report abuse rate up rate down Reply