One astonishing statistic shows just how behind American millennials are when it comes to homeownership
- Millennials own 4% of real estate value in the US - at their age, baby boomers owned 32% of the country's real estate value, Christopher Ingraham reported for The Washington Post.
- Increased housing costs and debt have made it difficult for millennials to afford homeownership.
- But it doesn't help that there's a shortage of starter homes - and that millennials don't want to buy the homes baby boomers are trying to sell.
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The latest is in on millennials' delayed entry into homeownership, and it tells a grim story.
Millennials only own 4% of American real estate by value - a lot less than the 32% of real estate value baby boomers owned at their age, according to new Fed Reserve data examined in the Economist.
It's worth noting that there's a small gap in the median age of millennials and baby boomers in these two data points - 31 in 2019 for millennials compared to 35 for baby boomers in 1990. But, while it's likely millennials could narrow the real estate value gap within the next four years, reported Christopher Ingraham for The Washington Post, it's unlikely they'll even reach 20% of the housing market.
Crippled with student debt and financially behind due to the fallout of the recession, it's difficult for millennials to save for the skyrocketing cost of housing. First-time homebuyers will pay 39% more than first-time homebuyers did nearly 40 years ago.
But there's more to millennials' slow path to homeownership than rising costs and saving difficulties.
A shortage of starter homes and a surplus of boomer homes
America is facing a shortage of starter homes. While millennials are expected to drive the housing market in 2020, most newly constructed homes in 2019 were devoted to "upper-tier housing" (homes costing at least $500,000), according to a Realtor.com report.
It doesn't help that many of the starter homes that are available are being bought up by real-estate investors with all-cash offers.
That's not to say there's an outright shortage of homes available: As baby boomers age, nine million homes across the US are expected to hit the market between 2017 and 2027, Laura Kusisto wrote for The Wall Street Journal. However, millennials just aren't interested in these homes.
That disinterest can be tied to a variety of factors. For one, baby boomers' suburban houses are located in unappealing locations to younger generations, who prefer metro areas. They're also outdated and oversized for millennials, who prefer smaller homes with more modern designs. It makes sense, then, that some millennials prefer to rent instead of buying or would rather wait for the right home to appear.
Ultimately, millennials either can't yet afford the investment of homeownership or don't think it's an investment worth making.
