Millennials may be America’s largest, most vivacious generation yet, but new research suggests that their homebuying prospects have only worsened with time.
According to a new analysis from Zillow, more Millennials now live with their parents than at anytime in the last decade. Here in Chicagoland, 24.4 percent of Americans aged 24 to 34 lived at home in 2014, up from just 15.7 percent in 2005; nationwide, the share of at-home Millennials rose from 13.1 percent in 2005 to 21.4 percent in 2014.
Here is a spreadsheet that shows how the share of Millennials living at home has risen nationwide:
Missing in Action – Millennial Homebuyers
Zillow’s research is only the latest to reaffirm one of the defining characteristics of the post-boom housing market – the absence of younger homebuyers. Earlier this year, the National Association of Home Builders reported that two million Millennial households are “missing” from the current housing market, meaning that compared to the housing market of 2000, two million more Millennials are living at home instead of managing their own households.
Those numbers are also reflected in the official homeownership rate from the Census Bureau. Since 2006, the young adult homeownership rate has declined from 43 percent to 34 percent.
Cause and Effect
The causes behind Millennials’ homeownership blues are many, but they all boil down to economics:
- Wages for Millennial workers have fared terribly since the recession. From 2007 to 2013, the wages for Millennials working in manufacturing fell 2.8 percent, compared with declines in the sectors of business (4.3 percent), retail (10 percent) and hospitality (14.8 percent). For Americans aged 18 to 24, the declines have been even worse – the retail and business sectors saw wages fall 21 and 22 percent, respectively.
- While wages have declined, home prices have continued to rise. According to RealtyTrac, since bottoming in 2011, the median sales price in the Cook, DuPage and Kane Counties has risen by 31, 19 and 32 percent, respectively; meanwhile, the average weekly wage in those same counties is down by as much as 7 percent.
- Since 1993, the average student debt burden has doubled to $33,000, and recent research from the Federal Reserve has argued that ballooning student debt is impacting housing. As of 2013, all 48 mainland states have between 20 and 30 percent of their 25-year- olds living at home with their parents (here in Illinois, the share is between 50 and 60 percent), and even when Millennials move out, they opting to rent with other debt- saddled Millennials – the share of doubled- up households has risen from 25 percent in 2000 to 32 percent in 2012, and here in Chicagoland, 36 percent of all households are doubled-up.
- Because of that high debt load – and because rental costs are now at their highest level in decades – Millennials have the worst savings rate in the nation at -2 percent, compared with 3 percent for Generation X, 6 percent for Younger Baby Boomers and 13 percent for Older Baby Boomers/Silent Generation.
The Soul of the Millennial Homebuyer
Despite everything, Millennials do want to own a home. A Trulia survey found that 93 percent of Millennials want to own a home someday, and 72 percent consider homeownership part of their American Dream. Whether or not the economic realities allow for such widespread homeownership, though, is an entirely different matter.