Why Aren’t Young People Buying Homes?

Introduction

Many people, older and younger alike, have likely seen articles complaining about how young people refuse to buy homes. Yet, many of these articles fail to examine the real reasons behind this phenomenon and to ask the most important question: why not? This article will aim to examine the why, as well as the factors going into home purchase in the modern day. 

The US Housing Market

Older generations often seem confused by young peoples’ current apparent reluctance to invest in housing. Many young adults seem more content to rent or live with their parents than to buy their own home. There are a few reasons for this, but the first and most obvious reason is money. Many millennials and ‘zoomers’ (GenZ) do not have enough credit built up to take out a home loan or do not feel financially stable enough to do so. Many young adults also find themselves mired in debt due to student loans, car payments, medical bills, and so on. With housing in the US more expensive than it’s ever been, it’s little wonder American young people are not jumping at the opportunity to buy a house - for many, it seems like a far-off dream. 

The Global Housing Market

However, this housing slump is not limited to the United States; the price of housing has soared globally in the last decade, exacerbated significantly by the onset of the post-COVID-19-pandemic inflation. Hong Kong has seen an 83% increase in housing prices since 2010; Canada, a 90% increase; New Zealand, a 97% increase; and at the top of the housing market balloon, Iceland saw a staggering 103% increase in housing prices, meaning the price of a home has more than doubled since 2010. The US, with a 63% increase, is not even in the global top ten! Worldwide, housing has seen a 27% increase in housing prices, and that’s all before accounting for inflation! Across the globe, from Korea to Canada, it’s no wonder young adults are shying away from buying property - they can’t afford it!

Finances and Priorities

Many millennials and zoomers, regardless of their personal wishes and aspirations, remain unpartnered and childless. The average age for both of these milestones is steadily increasing, as is the number of people choosing not to marry or have children at all. No matter the reason for any of this, the fact remains that marriage and children are both major factors in buying a home, and many single people may well feel the investment is not worth it otherwise. The changing nature of the family unit is only one factor, however; many young adults also find themselves bogged down by debt, which they feel hinders them from potentially buying a home. Furthermore, “Banks [have] tightened credit underwriting to reduce risk. They also double-downed on the 20% down payment rule for homebuyers. But as prices rise, it is taking Millennials longer to accumulate enough cash to put down on a home” (Investopedia). The bottom line is that buying a home is more difficult, more expensive, and less necessary than it once was. Family and homeownership are two huge financial commitments that many young people feel they are not in a position to make. 

Conclusion

It’s true that fewer young people are buying homes, which means fewer homes are selling. It seems reasonable to assume, however, that the current housing bubble will eventually burst; such is the nature of the housing market, and when it happens, people will inevitably leap on the opportunity to buy homes once again. As they do, prices will begin to rise once more, and the cycle will begin anew. While something more drastic may need to eventually change to lower the overall price of housing and manage the student loan debt crisis - if as many millennials and zoomers are to buy property as the generations before them, at least - those are more long-term issues. In the meantime, life will go on as usual, just as it always has.  

Sources:

Soltani, Ehsan. “Mapped: How Global Housing Prices Have Changed Since 2010.” Visual Capitalist, 2 Apr. 2023, https://www.visualcapitalist.com/cp/mapped-global-housing-prices-since-2010/.

U.S. Census Bureau. “Average Sales Price of Houses Sold for the United States.” St. Louis Fed, 26 July 2023, https://fred.stlouisfed.org/series/ASPUS.

Hankin, Aaron. “5 Reasons Millennials Aren’t Buying Homes.” Investopedia, 7 June 2017, https://www.investopedia.com/news/real-reasons-millennials-arent-buying-homes/#:~:text=Key%20Takeaways,at%20home%20with%20their%20parents.&text=Tighter%20lending%20criteria%20can%20also,those%20without%20much%20credit%20history.