Everyone knows that the younger generation - “millennials” - could just as well be called the renter generation. Only… That isn’t quite true anymore. Overall, yes, owning a home has become less common. From 2005 to present, the overall number of home-owning adults has gone down 8%. Though housing costs have gone up across most of the nation, the pace is not equal in all parts of the country. This in turn means that though the national rate of home ownership has decreased, in certain pockets around the U.S., home ownership hasn’t gone down at all.
Approximately around 10% of the largest cities in America, home ownership rates for young adults under the age of 35 has actually gone up over the past 10 years. The question then becomes why is the ‘renter generation’ becoming one of the biggest home-owning demographics in America and why only in certain areas? Simple - buying is actually cheaper than renting in many parts of America.
Big cities are out... small cities promote home ownership
Over the past ten years, home ownership among millennials dropped in 24 out of 25 of America’s largest cities. Homes in large cities are more expensive than those in the suburbs or smaller cities. Not only that, but the cost of living is significantly higher in large cities like Boston and New York than smaller cities such as Chesapeake, which has the fifth highest home ownership rate among young adults.
Buying is cheaper than renting
When people buy a new home, there is the option of getting a fixed-rate mortgage, meaning monthly payments will not rise over time. However, many rental properties are not rent-controlled and so the cost can and likely will go up.
There are more long-term benefits
Homeowners build equity in their homes by paying their monthly mortgage. Renters, on the other hand, are building their landlord’s wealth. Homeowners can potentially profit from their property if they move and sell it at a higher price - something becoming more common as the housing market recovers. There’s even the far future benefit of eventually paying off the home and being able to pass it down to children.
Many millennials are still cautious after witnessing the housing crisis that hit their parents so hard. Still, statistics don’t lie, and they show that many young adults are overcoming their fears and jumping into the housing market.
Glink, Ilyce. "Buying a Home vs. Renting in 2017." ThinkGlink. ThinkGlink, Inc, 13 Jan. 2017. Web. 22 Feb. 2017.
Shahani, Aarti. "Forget Generation Rent: More Younger Americans Aim To Buy." NPR. NPR, 24 Mar. 2016. Web. 22 Feb. 2017.
Wallace, Nick. "Where Are Millennials Buying Homes? – 2016 Edition." SmartAsset. SmartAsset, 26 Jan. 2017. Web. 22 Feb. 2017.