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Young Adults Delaying Homeownership

By S.E. Slack

Homeownership has dropped among young adults, according to the Federal Reserve Bank of New York. Due in part to the recession, young adults have delayed many of the traditional hallmarks of adulthood—such a buying a home or starting a family.

Aaron Terrazas, a mortgage analyst with real estate firm Zillow, says that in 2012, about two-thirds of young adults had achieved one or both of these hallmarks, compared with three-quarters a generation ago.

“The share with both a house and children has plummeted from 31 percent in 1990 to 21 percent in 2012,” says Terrazas. “What is striking, however, is that when it comes to choosing either a house or children, more young adults seem to be opting to become homeowners.”

The share of young adults with children but no house fell slightly from 21 percent to 20 percent, while the share of those with a house but no children actually increased from 23 percent to 27 percent. The rates appear to be the same nationwide.

Authors of the Federal Reserve Bank of New York study attribute some of the drop to the recession and student debt. As house prices fell, homeownership rates declined for all types of borrowers, and declined most for those thirty-year-olds with histories of student loan debt. The first time in at least 10 years that thirty-year-olds with no history of student loans were actually more likely to have home-secured debt than those with a history of student loans was in 2012.

“One possible reason for the failure of student borrowers’ housing and (other) consumption to return to pre-recession levels is the growing burden of student debt,” writes study author Meta Brown.

Another explanation is limited access to credit. However, Brown admits that some pieces of the puzzle might never be known. But wherever all the pieces are, the current housing market rebound appears to be marching forward without the help of young buyers.

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