Millennial Homeownership Climbs, But Still Lags Behind Previous Generations
Despite recent increases, the millennial homeownership rate continues to trail previous generations. According to the Census Bureau’s Current Population Study and an Apartment List renters survey, though the millennial homeownership rate is rising, the generational homeownership gap persists and the impacts of the ongoing COVID-19 pandemic have reinforced the trend for years to come.
At age 30, 42% of millennials own homes, compared to 48% of Gen Xers and 51% of baby boomers at that age.
Homeownership Rate at Age 30
· 42% Millennials
· 48% Gen X
· 51% Baby Boomers
Source: Annual Apartment List Renter Survey
The millennial homeownership rate grows even more concerning when looking at ownership among Black Americans. White millennials maintain a homeownership rate that is substantially higher than non-white groups, and only barely lower than previous generations. For Black Americans, not only is homeownership lower than the rest, millennials face the largest generational divide. By age 30, the white millennial homeownership rate (51%) is already 2.5x higher than the rate for Black millennials (20%).
At age 30, the white millennial homeownership rate is 2.5x higher than that of Black millennials.
Despite the racial disparities, millennials as a whole made great progress in 2020 when it comes to homeownership, accounting for more than half of all new mortgages. But, for the millennials who have yet to purchase a home, that dream is becoming more unattainable.
As the economy recessed in 2020 and job losses disproportionately fell on the shoulders of younger generations, home prices continued to climb higher. This has left a larger share of millennial renters feeling more hopeless about the prospect of homeownership. According to Apartment List’s survey, 18.2% of millennial renters say they plan to rent forever, up for the third consecutive year from 12.3% in 2019 and 10.7% in 2018.
Percentage of Millennials Who “Expect to always rent”
2018: 10.7%
2019: 12.3%
2020: 18.2%
Source: Annual Apartment List Renter Survey
This decline in expectations isn’t for a lack of desire for homeownership. In a separate survey by Apartment List, 90% of survey respondents viewed homeownership as important for personal success and financial security. So, what’s to blame for more renters feeling like ownership isn’t in the cards for them? Affordability.
According to Apartment List, among those who plan to always rent, 74% say they cannot afford homeownership, significantly more than those who cite the potential lifestyle benefits of renting, including added flexibility (34%) and avoiding unforeseen maintenance and expenses (32%).
Affordability Biggest Roadblock for Millennials
Survey: Why do you expect to always rent?
I cannot afford to buy a home – 74%
I like the flexibility that renting provides – 34%
I prefer to avoid home maintenance and other added costs – 32%
Source: Annual Apartment List Renter Survey
Affordability is also the biggest barrier for millennials who plan to purchase a home. According to Apartment List’s survey, over three-quarters say they are waiting until they have the financial means. Of course, the other factor holding back millennials in the housing market is the COVID-19 pandemic, with 40% of millennials who plan to buy reporting that the pandemic has had a direct effect on their homeownership plans, including 21% who now say they are delaying homeownership altogether.