Popular Belief #2: Millennials are not interested in ownership.
Detached from the idea of home ownership, and imbued with the idea of sharing, Millennials do not aspire to purchase their own home.
In France, young people under 30 accounted for just 9.8% of new homeowners in 2013, compared to 12% in 2001.22 In the United States, last year, the portion of first-time owners among home buyers reached its lowest (52%) since 1987. What does this lower rate of home ownership mean? Are Millennials turning their backs on home ownership and opting for other living arrangements?
Rather than a lower aspiration, these numbers reveal the increasing difficulty for young people to access home ownership. In fact, these global figures hide a strong polarization along income level lines: first and foremost, the decline in home ownership levels affects those Millennials with the lowest incomes, who are less likely to purchase their home today than young people of the same age in the 1990s and 2000s.
This polarization, however, is not exclusive to those belonging to the 18 to 35 generation. In France, the Direction de la recherche, des études, de l’évaluation et des statistiques (DREES) estimates that
“access to home ownership by the least wealthy has declined since the end of the 1980s, while it has improved over the last forty years for the most affluent. Among the poorest 25- to 44-year-olds , the percentage of homeowners has halved from 1988 to 2013, [but] it has increased by half among the most wealthy of the same age since the 1970s.”
In this day and age, the latter segment benefits more often from donations or inheritances — financial family assistance which, according to the DREES, increases the probability of purchasing a first primary residence by 15 points — while the first segment suffers directly from the rise in real estate costs, resulting from growing urbanization.
The same phenomenon can be seen in the United States, where the difficulty for low-income individuals to access home ownership affects all generations: thus, the proportion of homeowners has been steadily dropping for eleven years (from 69% in 2004 to 63.7% in 2015).
Consequently, the slowing of home ownership rates among young people may be interpreted more as the manifestation of a decline in income, savings, and purchasing power (the median income of young adults having gone, in the U.S., from $61,000 to $54,000 between 2000 and 2014), combined with a pronounced widening in inequalities at the start of adult life, rather than a hypothetical detachment by Millennials from the notion of home ownership, motivated by noble ideals of sharing.
Moreover, even disregarding income level, the Council of Economic Advisers (CEA) of the Executive Office of the U.S. President notes that the lower likelihood of home ownership among young people is the expression not of an aversion to home ownership but rather of an evolution of lifestyles, which is delaying access but does not change the desire:
“The gradual shifts in labor force participation, increased college enrollment, and delayed marriage (…) suggest that Millennials are delaying homeownership until they grow older, rather than substituting away from homeownership altogether.”
Millennials dream of owning their own homes as much as their elders: in the U.S., 90% of them expect to become homeowners some day, and 93% of renters aged 25 to 34 believe it is likely they will one day purchase their own home, compared to 81% for all ages combined.
To sum up, the effect of age and economic pressure explain the lower presence of young people among first-home buyers, much more than different aspirations specific to this particular generation.