Most millennials living in the nation’s largest metropolitan areas can afford to buy homes, but are instead choosing to rent or live with their parents, according to two leading household research institutions.
The majority of renters between the ages of 25 to 34 – the age range when most Americans purchase their first home – can afford the monthly costs associated with home ownership in more than half of the nation’s largest metros, according to the Harvard Joint Center for Housing Studies (JCHS).
Given that interest rates on new homes are at record lows since the onset of the financial crisis in 2007, experts had expected the number of young homeowners to increase. However the figure has declined.
In 2013, first-time homeowners accounted for 38 percent of all home purchases, slightly below the historical average of 40 percent.
According to the most recent American Housing Survey, 3.3. Million home sales were first-time buyers from 2009-2011, a 22 percent drop from a 2001 survey.
JCHS found that close to 30 percent of millennials who could afford to buy a home were already living in a major city, but stagnant wages, rampant unemployment and lingering memories of the housing crisis are keeping them in rentals instead.
Unemployment for the age group hit 10 percent in 2010 and remained above 7 percent through 2013. According to the study, in metropolitan areas where most renters aged 25-34 can afford to buy, a full third of the age group cannot. Many of those who may be able to buy also cannot afford the typical down payment of five percent.
Thirty-nine percent of millennials also carry student-loan debt and set aside a larger share of their income to cover loan payments, hindering them from saving for a home.
A report from Pew Research also found that more millennials are living in multi-generational homes – staying with mom and dad, grandparents or a combination of the two – at record levels, which can also be attributed to the consistently low wages and widespread unemployment for the age group.
According to Pew, 57 million people are living in multi-generational homes, double the amount since 1980. That works out to about one in four millennials (23.6 percent) that are living at home. Millennials are also more likely than their older counterparts to live in a multi-generational household, the first time that data has been recorded since researchers began tracking it in 1940.
Men are slightly more likely than women to live in a multi-generational home, at 26 percent and 21 percent respectively, and racial and ethnic minorities are the most likely to live in a multi-generational home, with Asian Americans having the highest share at 27 percent.
“This age group is a group of people who just watched the foreclosure process happen, so they might be a little more gun-shy then their predecessors were,” said Kerry Donahue, a spokeswoman for JCHS.
Donahue says that while people are currently delaying home purchasing, the number of millennials moving from renting to owning a home is expected to increase.
“Homeownership is still a goal for a lot of these folks, and so I think they will try to organize their lives in a way that it can become a reality for them,” Rocio Sanchez-Moyano, the researcher behind the JCHS study, told Al Jazeera. “Millenials are mostly under 30, so we’re expecting some of this to pick up over time.”
The news follows JCHS’ June 25th report, “The State of the Nation’s Housing,” which found that the decrease in young home ownership closely mirrored income trends, and that as time goes on and the economy continues to improve, millennials will move out of mom and dad’s place and find places of their own.