The 2020 housing boom, despite the coronavirus, seemed to have been fueled by Millennials. But even then, Millennial house owners are still way low compared to boomers. According to the latest Apartment List’s Homeownership report, last year millennials bought more houses than anyone else.
This trend reflects what we have seen in the last five years where millennials have largely out-bought every other generation in the home market. According to the report, certain factors appear to be driving the growth of millennial homeownership over the last 12 months.
First, the COVID-19 pandemic got a lot of people leaving from the cities which were hard hit by the virus. Additionally, interest rates in the US remain at a historic low, something that makes the cost of homeownership relatively less. We have also seen increased career advancement among millennials and increased incomes.
All these factors have made homeownership more attainable than it was a few years ago. Despite the surge last year, and over the last five years, the homeownership gap between millennials and boomers is still significant. According to the Apartment List report, only 42% of millennials are homeowners, a figure that represents less than half of the entire millennial population. However, 51% of boomers are homeowners.
Millennials even fall short of Gen Xers where 48% of that generation owns a home. Nonetheless, even though the pandemic has had a positive impact in accelerating homeownership for millennials, it may also hinder the progress we have seen recently.
Due to the economic uncertainty caused by the virus, many millennials have postponed plans to own a home as they wait to see if economic conditions will improve. As long as the health crisis persists, it’s likely we are going to see a drop in the number of new millennials homeowners.
The report by Apartment List showed that 21% of millennials who had plans to buy a home left them primarily because of the pandemic. 18% of millennials also say that they intend to rent forever with many arguing that renting seems more affordable than buying.
But it’s not hard to understand why most millennials own homes a bit later in life than boomers or Gen Xers. For starters, the cost of living in the US right now is very expensive. Even though incomes have risen moderately, it’s hard to cope with the high cost of goods and services. Additionally, many Millennials are still burdened by hefty student loans.
This is also the only generation that has faced two recessions in its lifetime. All these factors have surely made the dream of homeownership a little bit far-fetched for Millennials. Let’s also not forget the generational wealth gap between millennials and boomers.
Millennials hold four times less wealth in the US than boomers. This goes to show why fewer Millennials own homes compared to their parents. Even with their housing boom in 2020, there’s still a long way for them to go to catch up to boomers.