To rent, or not to rent? For many Millennials, that is definitely not the question. Many young Americans are more likely to ask, “To pay my student loans, or not?”
Since the Postwar years of the 1950s, homeownership has always been part and parcel of the American Dream. But data from recent years suggests Millennials are increasingly ambivalent about the benefits of owning their own home. Now, conflicting data shows that Millennials prefer to rent… except when they don’t.
In 2014, the U.S. Census Bureau and the Council of Economic Advisors to the White House reported that homeownership rates among Americans aged 35 and younger declined to their lowest level in recorded U.S. history for that age group. U.S. News and World Report confirmed the dip, reporting that in the first quarter of 2014, home ownership rates plunged to 36.2%, a new low.
Overall, homeownership rates were also down to their lowest level since 1995, at 64.8%. However, a March 2015 analysis from Bloomberg determined that rising rents were finally “nudging” young Americans towards buying rather than renting. First-time home buyers accounted for 29% of home sales in the first months of 2015.
Experts say the conflicting reports make broad conclusions impossible; there are simply too many factors to pinpoint whether Millennials prefer renting or buying. Furthermore, the financial benefits of renting versus buying are also difficult to calculate with precision, with too many complicating variables such as tax deductions, opportunity costs from down payments on mortgages, and rising or falling home values.
Still more data suggests Millennials are apprehensive about settling down in a single location, compared to their Baby Boomer parents. An estimated 35% of Americans between the ages of 20 and 24 move each year, while nearly 31% of those between ages 25 and 29 move annually. Plus, those Millennials increasingly migrate to urban locales, where apartment living is a practical and financial necessity.
And because Americans under 35 have more than $1 trillion in collective student loan debt, high unemployment, and stagnant wages, fewer Millennials expected to purchase a home compared to the generations that came before.
