What About the Millennials Who Aren’t Homeowners?
As I noted at the beginning of Talking to a Millennial Homeowner, the U.S. Census Bureau states that 33 percent of people between the ages of 25 and 29 own homes. (To be clear, many people over 30 count as Millennials too; some sources start the Millennial generation with people born in 1980 — who will be turning 35 this year — and Newsweek once put the start date at 1977.)
But what about the other 67 percent of Millennials-under-30 who aren’t homeowners?
Slate notes that, according to the Census Bureau, nearly 15 percent of people aged 25–34 are living with their parents (or “significantly older adults;” the Census Bureau tracks the ages of people living in the same household but not their relationships). Why is this type of living arrangement at “record highs,” especially when unemployment is dropping?
Ester wrote last week about the 22 states that prevent young people from getting jobs if they cannot pay back their student loans; Slate suggests that high student debt is also preventing young people from getting independent housing:
In September, a working paper by Federal Reserve board economists Lisa Dettling and Joanne Hsu found that rising student debt levels could explain about 30 percent of the increased rate at which young adults, ages 18 to 31, began moving in with their parents between 2005 and 2013. Local unemployment rates had a far smaller effect. And once falling housing prices were taken into account, the authors concluded that economic conditions should have actually decreased the number of boomerang kids (after all, even if jobs are hard to come by, cheaper real estate makes it easier to live solo). But debt was driving adults back into their childhood bedrooms.
Slate also proposes that young people aren’t moving out of their parents’ homes because they aren’t getting proposals of their own:
But the decline of young marriage is an appealingly straightforward explanation for some of the trends we’ve seen in the past several years. It’s easier for a couple to pay rent on an apartment than someone who’s single.
Well, it’s also easier for roommates to pay rent on an apartment, so I’m not too sure about that theory. But, as Vox notes, paying rent every month is one of those moves that might determine who stays poor and who becomes rich:
The rich spend a lot compared to the poor on mortgage interest. The poorest, meanwhile, spend a lot on rent. For lots of Americans, renting is a good decision, of course, but it’s true that spending on a house builds wealth, while paying a landlord each month doesn’t.
The distinction between broke vs. poor is important to acknowledge, so leaving use of the word “poor” aside, Vox also states that people in the lowest income quintile — which includes many of us, at some point in our lives — spend a lot of their money on rent. If you want to become rich before you’re 45, maybe it’s a smarter choice to postpone rent-paying for a while.
This is nothing new, of course, and neither is the statement that the rent is too damn high. Especially if you’re a Millennial who’s moved to a city that is likely to offer you high earning opportunities. As The Atlantic reports:
Today, the ten cities in the country with the highest median income for young people are, in order: San Jose, San Francisco, Washington, D.C., Boston, New York, Baltimore, Seattle, Minneapolis, Philadelphia, and Chicago.
Good luck becoming a homeowner in one of those cities. San Francisco’s $1,000/month dormitory bunkbeds are now such old news that the SF Examiner can run a piece titled “Some tech communes in SF play by the rules.” Back to The Atlantic again for a minute:
The theory would be that the agglomeration of talent on the coasts will continue to attract the smartest cookies from college, further sorting the country into a handful of elite cities on the oceans, separated by a smattering of thriving metros and a vast hinterland.
As I stand at my thrifted desk in my microapartment, I’ll take comfort in the knowledge that I am living in an elite city on the ocean. (Or on a sound, or whatever.)
Of course, it is possible to become a Millennial homeowner in one of those high-cost metro areas without, say, becoming a billionaire first. More on this before Real Estate Month is over.
For the rest of us Millennials — because if Slate is capping the age at 34 and Google’s capping it at 35 I have to acknowledge reluctantly that I, too, am a Millennial — why aren’t we homeowners? Is it our student debt, our decision to move to high cost of living areas, the fact that putting a large percentage of our income towards rent precludes us from saving up for down payments, or something else?
I’ll tell you why I’m not a homeowner tomorrow.
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