Millennial homeownership declines along with number of households
Millennial homeownership rates declined between 2009 and 2016 before picking up in 2017, even as the number of households under the age of 35 dropped by over 1 million, a ValuePenguin study found.
The share of renters to homeowners under the age of 35 was split 61.3% to 38.7% in 2009. That split went to 67.4% to 32.6% by 2016 and 67% to 33% in 2017, according to a study of U.S. Census Bureau American Community Survey data by ValuePenguin research analyst Chris Moon. The number of millennial homeowner households fell by 18.5% over eight years.
At the same time, the number of households headed by someone under the age of 35 fell to 22.7 million in 2017 from 23.8 million in 2009.
"However, renters under 35 continued to grow in number almost every year, meaning that the loss of homeowners under 35 was responsible for most of the overall decline," Moon said in blog posting accompanying the study. "This suggests that in most years, non-millennial homeowners who aged out of the under-35 group were not being replaced by an equal or greater number of first-time millennial homebuyers."
A recent Zillow study found that in 2017 45.3% of young adults — both renters and owners — moved within two years of establishing residence, compared with 33.8% of similar aged people in 1960.
When Americans of all age groups are taken into account, the ratio of homeowners to renters has been shrinking since 2009. About 75.3 million households owned in 2009 compared to 37.3 million renter households, a ratio of 2.02 to 1.
Even though the number of homeowner households rose approximately 500,000 by 2017, the number of renter households grew by 5.7 million, reducing the ratio to 1.76 to 1.
"When we charted the ratio of homeowners to renters for each type of housing, renters accounted for an increasing portion of single-family homes and mobile homes while maintaining their share of apartment homes. Besides supporting the idea that more U.S. households are choosing to rent in general, this trend suggests that people who need single-family houses — usually families — are becoming more likely to rent than buy," Moon said.
In 2017, 14.9 million renter households were in single-family properties, an increase of 26% from 11.8 million in 2009.
Besides the upfront costs, like the down payment, to buy a home, ongoing costs — such as a mortgage payment, insurance and taxes — need to be dealt with.
"The growth of renters relative to homeowners may be an indication that younger households are less willing or less able to meet the extra costs of owning a home. However, it remains to be seen whether these households are delaying homeownership or rejecting it outright," Moon said.
ValuePenguin is a personal finance website that is a part of LendingTree.