Millennials and the Homeownership Gap

millennials and the homeownership gap

Millennials simply are not buying homes at the same rate as previous generations did at the same age. There are a lot of underlying economic and cultural reasons for this gap. I’ve tried to narrow those reasons down into three broad categories.


  • The mobile age. Picking up and moving to a new city has never been easier. Technology and social media allow you to research a city, find an apartment and roommate, get a job, and meet friends without ever stepping foot inside the city. This shift in the way millennials interact with the world discourages settling down into a particular job or location during your twenties. Millennials as a whole are skeptical of homeownership.


  • The multigenerational trend fueled by student loan debt and high unemployment or underemployment. I am a university professor. I understand that the cost of college has been increasing at abnormally high rates. I can also tell you it is not because professors are getting big raises but is being driven by a high level of administrative bloat. Get used to it because that is not going away. I amassed a large amount of student loan debt too. It was an investment, and I think my ROI was pretty good. Millennials are not the first generation to be burdened with student loan debt, but the problem with student loan debt comes from the increasing cost of college and the increasing numbers of young adults attending college. Couple this with an economic climate where businesses are hesitant to hire due to high costs and market uncertainty, and buying a home is simply not a financial reality for millennials. In fact, many of them have moved back in with their parents to save money. Unfortunately, the cost of renting is also high because so many people simply don’t have the money for a mortgage downpayment or cannot qualify for a mortgage due to high debt to income ratios.


  • Home unaffordability. Although mortgage rates remain historically low, homeownership remains unaffordable for many millennials. Some of this is related to economics mentioned in the previous bullet point. The housing market itself, however, is also working against them. Housing markets around the country report the same trend – rising prices and short supply at the lower end of the market. While the luxury housing market struggles in these markets, prices just below the median home value at rising at rates that have not been seen for 10 years. CoreLogic Inc. reported that prices on the bottom 25% of the market were up nearly 11% in August when compared to the previous year. Furthermore, Sam Khater, CoreLogic’s deputy chief economist explains, “You’ve got the front end of a big wave of first-time homebuyers, but the supply of affordable housing is not there to meet that wave.”