From the NYT:
Besieged by the recession and buried in student loan debt, the so-called millennials, born from the early ’80s through the late ’90s, have largely lacked the financial wherewithal to buy their own homes. Even 30-year-olds were as likely to be stuck in their childhood bedrooms as they were to own their own place as of 2013, according to a recent report from the Federal Reserve Bank of New York.
But there are reasons to be optimistic. While college debt continues to dog this generation, several indicators suggest a widening path to homeownership in the next few years.
A BRIGHTER EMPLOYMENT OUTLOOK. The job market was particularly unkind to young adults during the recession. Between 2007 and 2010, the unemployment rate within this group soared to 14 percent from 7.8 percent, compared with 9.6 percent for the population as a whole, according to Alan MacEachin, the corporate economist for the Navy Federal Credit Union, in Vienna, Va., who used Labor Department data. But at a Feb. 25 financial forum on millennials and money in Washington, he noted that the outlook was improving. As of January, he said, the millennial unemployment rate was down to 9.3 percent. Mr. MacEachin predicted that young adults would enjoy rising wages over the next couple of years, especially given that, according to the Census Bureau, about a quarter of them have at least a bachelor’s degree.
MORE ARE MOVING OUT. Researchers at the University of Southern California Lusk Center for Real Estate in Los Angeles say that even though job levels haven’t fully recovered, new household formation — which cratered during the recession — is back up to pre-recession levels. Gary Painter, the center’s director of research, and Jung Hyun Choi, a doctoral candidate, looked at data from 1975 to 2011 and found that household formation rates typically take three years to recover after a major drop in employment. The Commerce Department put year-over-year growth in household formation at more than 1.6 million in the fourth quarter of 2014; during the recession, the annual average was closer to 500,000.
HOMEOWNERSHIP IS ON THE RADAR. One looming question is whether the housing market crash will cause young adults to shy away from homeownership and stick with renting. While it’s too early to say, a good share of young adults are at least thinking about owning. In a Bank of America/USA Today survey of millennials released in November, 32 percent said they were saving for a house. (On the down side, 22 percent said they were not saving at all.)
And last month, Redfin, a real estate brokerage, reported that 38 percent of millennials said they either would or have put off a wedding or honeymoon in order to save for a down payment on a home.