Right now, there is a great deal of consternation over the fact that the homeownership rate in the United States is at its lowest level in decades.
Many analysts and others place the blame squarely on the shoulders of millennials. Unlike previous generations, millennials have a low homeownership rate for their age group.
Other generations would have moved out of their parents’ homes, started families, and bought homes by now. Today, millennials are more likely than earlier generations to live at home and delay starting families.
However, some analysts are hopeful that things could change in the coming years. As millennials become more financially secure and get ready to start families, there is some chatter that they might finally be ready to take the plunge into homeownership.
Could Millennials Suddenly Rush Out and Buy Homes?
HousingWire reports that Freddie Mac believes that millennials are on the cusp of homeownership. While the current crop of young adults has been reluctant to get into careers, marry, and start families, Freddie Mac analysts believe that once they decide to move forward with these societal milestones, they will do so rapidly.
Additionally, those who are optimistic about the future of homeownership by millennials also cite an increase in programs designed to help homeownership. With education and help, combined with near-record-low interest rates, there are some that believe millennials could begin buying homes in the relatively near future.
Finally, the optimism argument takes a look at the fact that efforts to increase minority homeownership among millennials are increasing. Some non-white homeownership could make up for the current low homeownership, according to the HousingWire article.
But What if Low Homeownership is a Permanent Change?
Even though there are some analysts and economists who think that things are likely to improve, not everyone is on board with the idea that millennials are ready to buy homes.
First of all, points out an article from The Atlantic, many millennials just aren’t living lifestyles that are conducive to homeownership. The article looks at changing lifestyles for today’s younger adults. Many millennials are more mobile. They are likely to move around a lot and want to live as digital nomads. They are less likely to stay put. As a result, homeownership doesn’t look attractive.
Unless a millennial decides to buy a home to rent it out for income, a mobile person may not want the hassle of homeownership. It doesn’t fit the lifestyle.
Another issue, though, is that many millennials are stuck, according to The Atlantic. These millennials feel burdened with student loan debt and are worried about finding good-paying jobs. They feel stuck and don’t feel like they are financially secure enough to buy a home.
What About Rising Interest Rates?
Of course, there was some excitement with lower interest rates and affordable home prices. With low rates, many economists hoped a change was coming. However, since the presidential election, mortgage rates have shot higher. The recent Fed rate hike, although it doesn’t have a direct impact on mortgage rates, might still have an effect on what happens next.
For now, it appears that conditions might be easing a bit and millennials could consider homeownership in greater numbers than the last few years. However, it doesn’t look like homeownership will be as widely attractive to millennials as it was to the generations that came before.