Millennials Falling Behind in Housing May Cause Lower Lifetime Wealth

May 19, 2020 | Comments Off on Millennials Falling Behind in Housing May Cause Lower Lifetime Wealth

Millennial concept. Group students with gadgets in their hands. Vector illustration flat design. Isolated on white background. Modern fashionable young people. Generation y.

When baby boomers reached the median age of 35 in 1990, they owned nearly one-third of U.S. homes by value. In 2019, the millennial generation, now at the median age of 31, owns just 4%, according to data from the Federal Reserve.

As millennials enter more prime buying years, that figure is expected to rise by the time their median age reaches 35. But housing analysts warn that millennials aren’t likely to reach 30% of the market share—or even 20%, like the smaller Generation X was able to do at that age.

“We’re looking at a generation that will have lower lifetime wealth” as a result, Jenny Schuetz, a housing policy expert at the Brookings Institution, told The Washington Post. “That’s bad news for the economy overall, not just millennials.” Homeownership has long been a traditional builder of wealth to the middle class, she adds.

Many millennials may be getting priced out of housing markets. The median home price is far beyond the typical salary. Plus, millennials carry a large amount of debt, which is preventing them from saving for a home. Households headed by someone younger than 35 saw debt rise from $21,000 in 1989 to $39,000 in 2016 (adjusted for inflation). Student loan debt has more than doubled—17% to 45% in that time frame. Further, the median debt more than tripled—$5,600 to $18,500.

The key for some millennials may be getting help from their parents. “Millennials whose parents are sitting on lots of housing wealth will have an easier time paying for college or coming up with a down payment,” says Schuetz. Even if they don’t inherit the money, they still tend to have some type of family safety net.

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