A Lull in the Market: Is One Generation to Blame?
According to the U.S. Census Bureau News report on October 28, 2014, residential homeownership has fallen to a 19-year low within the past year. Many industry experts initially believed this was due to student loan debt combined with a limited corporate job pool for recent Millennial* grads. However, there may be another generational group turning away from the prospects of homeownership even faster than Millennials.
Today’s historical lows in homeownership may be influenced greatly by a group within Generation X. In fact, Generation X Americans between the age of 35 and 44 have contributed to a radical decline in homeownership since the recession struck in 2009, far outpacing the national rate. Since 1994, the rate of homeownership is actually up 0.09%. Contrary to this slight increase, the homeownership for Americans between the age of 35 and 44 is down from the third quarter 2013 rate.
Why have 30-to-40-year-olds with established careers – most of them with a college education – opted out of homeownership? Generation X homeowners were the hardest hit from the 2009 market crash, impacting the gradual decrease in the Generation X workforce compared to the generation before it. Just 20 years ago, there used to be 16 million more Baby Boomer** workers between the ages of 35 and 44 than those between the ages of 55 to 64. Today, more Americans are living longer and are forced to slowly build up lost retirement savings from the recession. With incomes becoming more conservative, the labor force is working well into its 60s and even early 70s. Baby Boomers are unable to sell to interested Generation X buyers because they are no longer able to upgrade their homes. Conversely, Millennials are often unable to buy underwater Generation X homes because they are underwater on their own mortgages, renting, or paying off college debt.
There are many different takes on why the housing market is where it is at, even five years after the financial crisis. Although the housing market is picking up overall, it is a sluggish improvement. The catalectic struggle between generations is apparent with each working toward financial stability, yet lacking the resources or job security to reach it.
*A term used to describe those born between the year 1982 and the year 2000
** A term used to describe those born between the year 1946 and the year 1965