There’s a quasi-war over housing going on between U.S. millennials and the generations comprising their parents and grandparents, with many 25- to 40-year-olds caught between blaming older generations for their difficulties in becoming homeowners and feeling dependent on them for necessary financial help if they are ever to succeed.
1 Dec 2021
Today, the fourth part of a broad new study conducted by Legal & General Group, U.S. Millennials and Home Ownership – A Distant Dream for Most, is released, diving into the deeply-held grudge millennials hold against Baby Boomers in particular for thwarting their home buying plans.
This fourth segment of the data-rich study, Mind the Gap: The Intergenerational Home Ownership Blues, looks at the skyrocketing cost of housing and how changing intergenerational housing needs and other unseen factors are contributing to the reality of housing unattainability for many millennials. With longer healthy life expectancies than ever before, Baby Boomers are deciding to downsize but remain in privately owned housing, putting a strain on affordable housing stock just as the younger generation of home buyers want to buy starter houses. While the long-term consequences of these demographic shifts are still unfolding, the study found other factors exerting added pressure on the housing market, including institutional investment.
Legal & General’s study looks not only at the intergenerational housing gap, but also at demographic choices based on age and life stage, and at various drivers shaping these choices, including corporate investment and the rising cost of housing. The next segment of the study will look at the role of student loans and medical debt in hindering millennials in their home ownership quest.
Legal & General Group Chief Executive Nigel Wilson: “The severe shortage of affordable housing in the U.S., as well as the disproportionate amount of wealth held by older generations, significantly mirrors what we’re seeing in the U.K. Beyond older generations staying put in their own homes or being in a more competitive position to purchase starter-size smaller homes as they downsize, we see other market forces at work which are worsening the supply-demand imbalance. In the U.K. at Legal & General, as part of the solution to this imbalance, we are building a larger stock of affordable homes for first time buyers to purchase, as well as creating more opportunities for ownership through rent-to-buy programs.”
Study Co-Author and Legal & General Corporate Affairs Director John Godfrey: “The proportion of 30-year-old U.S. home buyers has gone down steadily with each passing generation—over half of Baby Boomers owned a home at 30, 48 percent of Gen Xers, and so far millennials are at the bottom with just 42 percent. Considering that home ownership is a fundamental way to build wealth, it bodes poorly for millennials that affordable housing is becoming increasingly inaccessible to them. We should be meeting the demand by creating more opportunity, not less, for home ownership.”
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2022