Stop Pointing Fingers At Millennials: Gen X Is To Blame For Dragging Down Homeownership, Too
Economists are always blaming Millennials (also known as Generation Y) for something. Recently, Gen Y was ripped for dragging down homeownership rates. But are they the only culprits? While some members of Generation X love shouting, “Those damn Millennials!,” little do they know that they are a part of the problem too, CNN Money reports.
In the first quarter of 2015, the homeownership rate dropped to 63.7 percent. That’s the lowest since 1993. This time, we’re pointing fingers at Generation X, Americans between the ages of 35 and 54.
“The drop in [Generation X] homeownership rates may well be a more critical factor in the ongoing weakness of the owner-occupied segment than the slow transition of the millennial generation (born 1985–2004) into homebuying,” Harvard’s State of the Nation’s Housing 2015 report said.
According to the report, homeownership among Generation X had the largest drop in comparison to other age groups since 1993. Their homeownership rate now hovers “4–5 percentage points below rates among same-aged households 20 years ago,” according to Realtor, citing the report.
Consumer Affairs said the economic downturn negatively impacted homewnership rates among Generation X because the recession came at a time of the age group’s “first-time home buying years.” So now, instead of purchasing a home, Generation X is staying in the rental industry a lot longer than expected.
“The normal cycle of renting and moving onto homeownership and making room for younger renters to follow isn’t happening as quickly,” said Daniel McCue, senior research associate at The Joint Center for Housing Study of Harvard University.
So Millennials are facing Generation X in a vicious competition for rental households, which are driving up costs and making it more difficult for prospective first-time Millennial buyers to “scrape together money for a down payment,” Time said. The percentage of Gen Y renters who are “cost-burned” — meaning they shell more than 30 percent of their income for rent — jumped from 40 percent to 46 percent over the last 10 years.
The increasingly high rent, according to Consumer Affairs, is prompting Millennials to become serious about homeownership.
“We’re observing an uptick in Millennial traffic and sentiment that we expect will result in more first-time home buyer sales in the later part of the year,” Realtor.com chief economist Jonathan Smoke said.
Time said the researchers proposed looser lending standards to ease homeownership for Americans, but adds, “[T]hat was a big part of what got us into the housing mess in the first place.”