Recent studies have stated millennials are buying 8% fewer homes than their baby boomer parents and grandparents. The delay in homeownership for millennials could have long-term economic consequences. For most people, home equity is usually the largest single source of personal wealth.
A recent study titled, Millennials Could Be Foregoing Equity Wealth, compared the difference in housing wealth over three categories of homeowners. The results are as follows:
- Homeowners who purchased their home between the ages of 25 and 34 had an average housing wealth of $150,000.
- Homeowners who waited until age 35 to 44 to buy their home averaged $72,000 less.
- Those who became first-time homebuyers at 45 or older had at least $100,000 less.
We then researched the reasons millennials aren’t buying homes and came across the research report by the Urban Institute titled, Millennial Homeownership: Why Is It So Low, and How Can We Increase It?.
This report listed the following reasons for the delay in homeownership:
- Delayed Marriage. – Being married increases the probability of homeownership by at least 18 percent.
- Increased Education Debt. – A 1 percent increase in education loan debt decreases the likelihood of owning a home by 0.15 percent.
- Increased Rents. – For the single millennial, it is much more challenging to pay a higher rent and still save money for a home.
- Delay in Marriage. Being single versus being married drastically reduces household income.
- Delayed Child Bearing. For married couples, a child increases homeownership by 6.2 percent.
So the question remains, how can we change the statistics? How can we help millennials become homeowners and increase their housing wealth at a younger age?
The same report then discusses policies and ideas which they feel could increase millennials’ access to homeownership and address the concerns they face:
- Educate young adults on the financial benefits of homeownership. This education could start as early as high school and include information about downpayment assistance programs, mortgages, credit scores, etc.
- Provide downpayment assistance programs.
- Use technology to simplify the mortgage process.
- Expand credit assessment criteria.
- Change land-use and zoning regulations to allow for more affordable housing, especially in highly populated, metropolitan areas.
We believe everyone should have the opportunity to purchase a home if they so choose. If you need assistance or would like to see available homes in your area, contact us directly at BrandyCoffey941@Gmail.Com or 941.404.4737.