The housing crisis is over—right? So it would appear, with home prices and sales steadily increasing this past year. And yet, one age group is not reaping the benefits … millennials.
USA Today analyzed U.S. Census Bureau data revealing that the homeownership rate declined 7 percentage points for 25- to 34-year-olds from 2006 to 2011, falling from 46.7% to 39.7%. That’s the largest decline in a homeownership rate among all age groups. In contrast, the homeownership rate for all ages fell a mere 2.7 percentage points to 64.6% during the same time period.
Why such a drastic difference for these young adults? The impact of the recession goes beyond financial implications—there’s a psychological aspect, as well. Budge Huskey, C.E.O. of residential brokerage Coldwell Banker, told USA Today that young adults have “seen other friends or acquaintances that may have even gone through a foreclosure.” And that’s scaring them away from the prospect of investing in a new home.
High unemployment, student loan debt, poor credit, low housing inventory and stricter qualifications for homeownership likely also contribute to the low confidence millennials currently feel toward buying a home.
To make matters worse, the desire among millennials to be homeowners hasn’t abated—only the opportunity. “What we haven’t seen is a fundamental shift in the long-term desire to become homeowners,” Chris Herbert, research director for the Joint Center for Housing Studies at Harvard University, told USA Today. “But we have seen both a declining ability, as well as the willingness to make that leap in the last few years.”