Student loans, weak job outlook crushing home dreams
Young Americans are putting off home buying at unprecedented levels. The home ownership rate for the Millennial generation has fallen to its lowest level since the U.S. Census Bureau started tracking home ownership by age in 1982.
The home ownership rate in the first quarter of 2014 for Americans 35 and under fell to 36.2 percent, dropping from 36.8 percent in 2013. Broken down even further, Americans in the 25-29 age group had the biggest decline in home ownership rates at 33.3 percent, followed by 47.5 percent for the 30-34 age group.
Granted, home ownership for all age groups has fallen to 64.8 percent, the lowest level since 1995. But Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., says that high student loan debt and sluggish unemployment are added elements that are keeping many young Americans on the sidelines.
“The labor market for younger people remains pretty bad,” Baker said. “Obviously you’re worse off without a college degree, but for people with college degrees, if they have a regular job, often it’s not paying very well and often they are jobs that pay just as well for people who have just a high school degree. They also have a lot of debt. So it’s not surprising that people in their late 20s or early 30s are less likely to buy a home than what might have been the case 20 or 30 years ago.”
The unemployment rate for those ages 20-24 is 12.4 percent, according to March data from the Bureau of the Labor Statistics. The unemployment rate for Americans 25-34 years old is 7 percent, compared to the national average unemployment rate of 6.7 percent.
“Those stories you hear about people in their 20s or early 30s living with mom and dad, those aren’t just stories, and if people don’t move out, they’re not going to buy a house again because we’re still in the aftereffects of the worst financial crisis in 75 years,” said David Wessel, senior fellow of economic studies at the Brookings Institution in Washington, D.C.