Fewer Young People Own a Home, but a Shift in the Trend Is Expected

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The home ownership rate for people under the age of 35 has dropped down significantly from its levels before the economic crisis. Many young people are now living with their parents or in rental apartments with high rental rates. This situation has an adverse effect on the housing market, but as the economy will be recovering at a faster pace in the coming years, the millennial generation is expected to buy more homes.

During the first quarter of 2014, the homeownership rate for people under the age of 35 was 36.2%. This was 6.9% lower than the historic high reached in 2005. Back then, the homeownership rate for this age group was 43.1%.

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In 2013, over 2 million adults between 20 and 30 years of age lived with their parents. The number of adults over the age of 30 living with their parents exceeded 300,000. This trend remains in 2014 as fewer young people are able to purchase a home. At the same time, many young people continue to pay high rent.

There are different barriers which prevent young people from buying a house at present. The primary one is formed by the tight lending standards. The large down payment and the high credit score required for conventional mortgages dissuade prospect first-time home buyers. The high rental rates have adverse impact on housing affordability as well. Currently, over 50% of renters are determined to be cost-burdened while 28% allocate more than half of their income to paying rent.

The much awaited economic improvement is expected to boost the demand for housing coming from the millennial generation. A recent research predicts that by 2025, this generation will have formed 24 million new households which will bring a major boost to the housing market. Improvement may occur sooner than expected as the number of employed young people and those with children is growing especially in the urban areas.

Christian

Christian

Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info
Christian

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