They’re making good money and got on with their lives. This demand, fueled by low interest rates and FOMO, was part of the force behind the price surge.
By Wolf Richter for WOLF STREET.
It has never been easy for young people, when they start out, to buy a home. “House poor” and “house broke” are time-honored expressions that have been around for many decades, and for a good reason, because when people are starting out, they go way out on a limb to buy a home, and then cannot afford anything else because the mortgage payments eat up much of their income.
Yet homeownership rates of younger people have actually increased. In fact, most of the increase in the overall homeownership rate from 2016, and nearly all of the increase since 2019, through 2022, was driven by people under 45.
The homeownership rate overall peaked in 2004 at 69.2% and then fell for 12 years until it bottomed out in 2016 at 63.7%, according Census Bureau data. What we’ll look at in a moment is what age groups were behind the growth in homeownership rates from 2016 through 2022, and from 2019 through 2022.
The Census Bureau’s report on its Population Survey/Housing Vacancy Survey, released today, sorts out the homeownership rate of “householders” – people in whose name the home is owned, being bought, or rented – by age group for two time periods: from 2016 through 2022, and from 2019 through 2022. And growth in homeownership rates for both periods was driven by people under 45 years of age.
Homeownership rates between 2019 and 2022 include the year before the pandemic and the year afterwards. By age group:
- Less than 35 years, homeownership rate: +2 percentage points to 39.0%.
- 35-44 years, homeownership rate: +2 percentage points to 62.2%.
- 45-54 years, homeownership rate: unchanged at 70.5%.
- 55-64 years, homeownership rate: unchanged at 75.1%.
- Over 65 years, homeownership rate: +0.5% to 79.1%.
From 2016 through 2019, homeownership rates increased by age group:
This is an interesting revelation – but not a surprise – because it leans against the often-repeated media story that younger people have been locked out of the housing market or whatever.
It has always been tough to get started for people on their own. But many young people in the 44 years and below age groups have moved their careers into high gear, some are running companies, some are in Congress, some are in state and local governments. Tech and social media companies and lots of other companies are largely staffed by them, and they’re making good money and have gotten on with their lives.
And their demand (millennials are a huge generation), fueled also by the low interest rates at the time and likely by the fear of missing out (FOMO), was part of the force behind the surge in prices.
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