Youth is wasted on the young. But homeownership soon may not be

Costs outpacing incomes have deterred potential buyers

New York /
Jul.July 02, 2018 04:15 PM

A sold home with millennials (Credit: Pixabay and iStock)

Over the next decade, a greater portion young Americans are poised to become homeowners.

The homeownership rate of young adults will probably rise to 58.1 percent in 2025, Bloomberg reported, citing Freddie Mac. The rate could rise as high as 60 percent in a more optimistic scenario, or 55.9 percent under a more pessimistic one.

Between 2000 and 2016, roughly 700,000 young adults chose not to buy a home because costs outpaced incomes, the report said.

“Historically low mortgage rates and increasingly favorable employment conditions should have generated a far greater number of home purchases by young adults, especially in the last five years,” said Sam Khater, Freddie Mac’s chief economist. “Unfortunately, home-price and rent growth above incomes — driven primarily by a severe shortage of housing supply — have been too high of a hurdle for many would-be buyers to clear.”

According to a previous report, the group of renters who say they don’t have enough money to become a homeowner rose from 59 percent to about 67 percent in just two years time. Meanwhile, nearly 40 million American households were cost-burdened in 2016, meaning that they spent more than 30 percent of their incomes on housing. [Bloomberg] — Meenal Vamburkar

 

Related Articles

arrow_forward_ios
Quay Tower at 50 Bridge Park Drive and 90 Furman Street (StreetEasy, Compass)
Brooklyn Heights condo tops luxury contracts at $2.6K per square foot
Brooklyn Heights condo tops luxury contracts at $2.6K per square foot
First-time buyers in New York City have prime options in 4 out of the city’s 5 boroughs, according to a report from StreetEasy (iStock)
Sheepshead Bay tops ranking of best NYC neighborhoods for first-time buyers
Sheepshead Bay tops ranking of best NYC neighborhoods for first-time buyers
Manhattan luxury market rebounds from late-summer slump with 31 condo sales
Manhattan luxury market rebounds from late-summer slump with 38 sales
Manhattan luxury market rebounds from late-summer slump with 38 sales
The Kalikow Group President & CEO Edward Kalikow with the complex (Kalikow, Kaled)
In hot rental market, LI developer sells another South Carolina complex
In hot rental market, LI developer sells another South Carolina complex
Shelter Island and Town Supervisor Gerry Siller (iStock, Town of Shelter Island)
Shelter Island prices squeezing out affordable housing
Shelter Island prices squeezing out affordable housing
Wells Fargo hit with $400M suit for breach of contract linked to robo-signing scandal
Wells Fargo hit with $400M suit for breach of contract linked to robo-signing scandal
Wells Fargo hit with $400M suit for breach of contract linked to robo-signing scandal
The slowing of the housing market has squeezed the profit margins of house-flipping investors. (iStock)
Profit margins on fixer-uppers fall to 10-year low
Profit margins on fixer-uppers fall to 10-year low
The Saratoga County construction company owner defrauded homebuyers and lenders out of $1 million, spending money on himself or other jobs rather than the homes he promised to build. (iStock)
Upstate homebuilder gets prison for failing to deliver
Upstate homebuilder gets prison for failing to deliver
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...