After the turbulence of 2020, more millennials doubt they will ever be able to purchase a home. A new survey from Apartment List analyzing homeownership trends found that 18% of millennials expect to rent forever, up from 12% in 2019 and 11% in 2018. As a result, millennial homeownership is currently trailing previous generations.
Currently, at 47.9%, millennials have the lowest homeownership rates of any other generation. By comparison, gen-X’s homeownership rate is 69%, while 77.8% of baby boomers and 78.8% of the silent generation owns their home. This data also reveals that homeownership has steadily declined through each generation.
In the last decade, millennial home ownership has increased more rapidly than any other generation; however, this is likely due to age differences between the generations rather than another trend as millennials are in prime home-buying age. Indeed, when the Apartment List data isolates homeownership among millennials, they still trend behind other generations. At age 30, only 42% of millennials own a home, compared to 48% of gen-X and 51% of baby boomers at the same age.
Although millennial pessimism around home ownership increased last year, millennials actually enjoyed a strong year in the homeownership market. The demographic currently accounts for half of all new mortgage originations. In fact, they were responsible for a larger share of new home purchases last year than in 2017, 38% last year compared to 34% in 2017. First time home purchases also increased, from 31% to 33% in 2020. In fact, home purchases are speeding up enough to close the generational gap.
Although low interest rates helped support more homeownership growth, affordability challenges worsened during the pandemic. Affordability has been the major challenge for millennials. Among the reasons why millennials feel they will rent forever, affordability ranked as the top challenge. According to the Apartment List survey, 74% of millennials said that they cannot afford to buy a home, and 21% said that they felt owning a home was financially risky. On the other hand, 34% of millennial respondents said that they prefer the flexibility of renting, and 32% said that they wanted to avoid the costs of home maintenance.
Still affordability is the biggest hurdle to improving millennial homeownership. The down payment is among the top challenges. 63% of millennials have no down payment saved, and only 15% have more than $10,000 in a down payment saved.
Other homeownership surveys found renewed interest in millennial homeownership. In September, a report from Morning Consult found that 28% of millennials are more interested in purchasing a home because of the pandemic.