Millennials blame Baby Boomers
Only 43% of US millennials are currently homeowners – the lowest home ownership rate of any generation. Just over four in 10 of 30-year-old millennials currently own their own homes, as compared with 48% of Gen Xers (now 41 to 56) and 51% of Baby Boomers (now 57 to 75) who owned homes when they were 30 years old. Frustrated millennials who respond to surveys repeatedly blame Boomers and older generations for their difficulties in getting on the property ladder.
Everyone’s chasing the same housing stock
At the same time that the younger generation is ready to buy a starter home, Baby Boomers – blessed with longer life expectancies than any generation in history – are deciding to downsize, putting a strain on available housing stock. Baby Boomers (and Gen Xers) have time and cash flow that’s unavailable to the younger generations, and so are able to zero in on small, affordable houses as soon as they come on the market. As a result, many millennials are feeling disillusioned, unfairly treated, and often deeply resentful of the older generations.
Inequality in inherited wealth
Almost a quarter of millennials couldn’t get together a down payment without borrowing or being gifted family money. However, demographic inequalities will impact the ability of their parents or grandparents to pass on property or other assets. What’s more, the longer life expectancies of older generations mean they will probably have to wait longer to benefit.
Other forces working against millennials
The pandemic brought the fastest-rising real estate prices in US history, fuelled by people seeking to move out of crowded cities and a lack of affordable housing. In addition, institutional buyers have collectively taken a lot of stock off the market. In 2020, private equity firms accounted for one in every five home sales in the US, while in the first quarter of 2021, corporate investors bought up 15% of all the homes that were for sale in the US.
Possible solutions
The situation for millennials could be improved by creating more opportunity for ownership through increased affordable housing stock, created using new technologies to build, for example, high-quality modular homes. Business models based on helping renters become owners and urban regeneration that includes rehabilitating the housing stock in smaller, more affordable cities, and bringing their infrastructure into the 21st century, could also help.