Millennials are one of the driving forces behind declining homeownership across America.
For the first time in two-plus years, the US homeownership rate has fallen, reported Laura Kusisto of The Wall Street Journal. It decreased from 64.8% in the fourth quarter (near the 65% historic average) to 64.2% in the first quarter, Kusisto reported, citing new data from the US Census Bureau.
While millennials had been fueling the steady growth in homeownership since 2017, they saw "some of the steepest falls," according to Kusisto — the homeownership rate of households headed by someone younger than 35 fell from 36.5% to 35.4%.
In the last six months of 2018, she said, rising mortgage rates, high home prices, and a shortage of starter homes have slowed the housing market. Essentially, an increasingly expensive real estate market hasn't left millennials much choice but to delay homeownership.
Back in 2017, Spencer Rascoff, Zillow's CEO, told Business Insider that "the whole real-estate industry now is characterized by extreme scarcity and inventory."
Two years later and it's still a seller's market, according to Zillow. This causes home prices to shoot up, leaving minimal inventory at the middle and low end of the housing market, Rascoff said.
It's an endless cycle; as a result of a limited starter home inventory, millennials are renting longer, Rascoff said.
Homes are 39% more expensive than they were nearly 40 years ago, according to Student Loan Hero. And a report by SmartAsset found that the median-priced home outweighs the median income by so much in some cities that it could take nearly a decade for someone with median income to save for a 20% down payment on a median-priced home.
It's even harder to take out a mortgage for millennials who have student loan debt, which has hit record levels — the national total student debt is over $1.5 trillion and the average student loan debt per graduating student in 2018 who took out loans is $29,800, according to Student Loan Hero.
Fewer 25- to 34-year-olds are also living with a spouse or partner, Business Insider's Akin Oyedele reported, citing the US Census Bureau. The data suggests that milestones, like marriage, that often precipitate buying a home are happening later.
But it's worth noting that while the homeownership rate has fallen, it's about the same as it was a year ago, according to Kusisto.
