New study underscores market difficulties and the barriers to homeownership, particularly for younger buyers Despite signs that the home sales, prices and construction continue to improve in key markets, several formidable obstacles stand in the way of a national housing recovery — especially challenges confronting younger buyers — according to a new report recently released by the Joint Center for Housing Studies of Harvard University.
The good news from the report is that millennials (ages 18 to 34) are expected to form 24 million new households between 2015 and 2025, which should bolster demand for new housing. The bad news is that continued lack of jobs, falling incomes, narrower access to credit, and increasing debt from student loans are among the factors curtailing growth and preventing younger and first-time buyers from becoming homeowners today. Key findings of the study include: 15.3 million adults in their 20s and 3.1 million in their 30s resided with their parents in 2013.
Real median annual income for households aged 25 to 34 dropped 11 percent from 2002 to 2012.
Student loan debt rose by $114 billion in 2013, accounting for 63 percent of total debt growth over the past year.
Homeownership rates for those aged 25 to 34 decreased nearly 8 percentage points between 2004 and 2013.
These indicators point to an entire generation — millennials, also known as Gen Y — being unable to afford and unenthusiastic about purchasing a home, say the experts.
“The fact that so many young Americans aren’t motivated to buy homes has an impact on the housing market,” says Brian Koss, executive vice president for the Mortgage Network in Danvers, Mass.
Dr. Dani Babb, broker for The Babb Group Real Estate in Newport Beach, Calif., says the key takeaways from the report are that sociological factors — such as lacking the belief that owning a home is a key to the American dream — are impacting buyers’ decisions to purchase or not, as are tangible economic factors.
“It’s tough to save for the down payment and qualify for a loan, there’s a lack of good paying jobs and certainty, and the economic recovery in general has been sluggish overall,” Babb says.
— Erik J. Martin
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