Fewer Young People Can Afford to Buy a Home

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The housing market is finally showing signs of recovery in the spring of 2014. The number of new construction starts increased by 13.2% in April. The slightly lower interest rates stimulate buyer activity. At the same time, the statistics show that fewer young adults enter the housing market. This trend may remain unless the economy starts growing at a higher rate.

In 2014, the home ownership rate for young adults is 36.2%. In 2004, it was 43.6%. It marked a steady increase of 3.1% from 2000 to 2004. It held its high level from 2004 until 2007 when it started its decline. It reached the level of 40.5% from 2000 in 2010 and continued to decline at an even faster rate to reach its current level.

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There are several major factors contributing to the decline of the home ownership rate for young adults. One of them is the low employment rate among young adults between the ages of 20 and 24. It is currently 61%. Additionally, many of the young people who have a job do not earn sufficient income in order to be able to save for a down payment on a mortgage loan.

Employment flexibility contributes to the low home ownership rate as well. Many young people prefer to move to a bigger city with a better-paid job rather than to buy a home and settle in a small town. Young people start a family at an older age compared to two or three decades ago and this affects their decision for buying a home as well.

Many young adults have low credit score primarily due to difficulties with student debt repayment. Even those who are repaying their debt diligently have little money left to afford a home. These are among the major factors contributing to the inability of young adults to purchase a home.

These factors will contribute to the home ownership rate for young people remaining around its current level.

Mailynne

Mailynne

Mailynne serves as a content strategist and writer for mortgage.info. She is ahighly task-oriented strategic planner and experienced writer. Over the past 10 years, Mailynne has managedcontent for both large corporations, non-profits and businesses. She specializes in managing digital marketing,branding and web development content. Mailynne has worked with a variety of local, national and international organizations.

Contact: mailynne@mortgage.info
Mailynne

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