According to an article in Marketwatch, many would-be first-time buyers are unable to purchase a home. Those aged between 18 and 39 who are currently renting are more likely to say purchasing a home is in their future plans.
Even though the majority plan to own a home one day, only half are planning their home purchase the next time they move. This has meant that first-time buyers haven't been driving the housing market recovery, and is one reason why the turnaround has been stronger.
Lots of millennials are struggling with student loan debt, less than perfect credit scores, and a lack of savings which is hampering their dreams to own a home. In addition people are tending to get married later and are delaying having children, both of which are life events that tend to prompt home purchases. The lack of young adults purchasing a home has affected the homeownership rate which fell to 64.8% during the first quarter of this year compared to 65.2% in the fourth quarter of last year, according to US Census statistics. In 2004 the rate was as high as 69.2%. Statistics for those aged 35 or younger show the rate has fallen even faster, dropping to 36.2% during the first quarter of this year, compared to 36.8% in the fourth quarter of last year. During the second quarter of 2004 the home ownership rate for this group was as high as 43.6%.
Experts have pointed out that this particular group has probably had a harder time recovering from the recent recession, and that for now a higher percentage of household formation is likely to be due to rental households. It's anticipated that home ownership rates will continue to drop, perhaps reaching as low as 62% before they begin to rise.
Other experts have suggested there may be a shift away from home ownership, but it may be too early to say whether this is true. Young adults wishing to become homeowners face a number of different hurdles, including unemployment and low savings rates. In April the unemployment rate for young adults aged between 18 and 29 was 9.1%. This figure increases to 15.5% if those who have given up looking for work are included. The unemployment rate for all ages was 6.3% in April. A recent Gallup poll showed 29% of adults younger than 35 still live with their parents, and most of those who are renting have insufficient funds to cover a 5% down payment plus closing costs for a typical first-time.