Three Reasons Why We Should Indeed Be Alarmed by the Homeownership Rate of Millenials

18 Jul 2014 | Sarah Murphy Gray, PolicyLink Financial Security Intern
Three Reasons Why We Should Indeed Be Alarmed by the Homeownership Rate of Millenials

A Response to Emily Badger’s Washington Post article: “Why plummeting Millenial homeownership isn’t as alarming as it seems”

  1. “Attitudes towards homeownership” ARE NOT fundamentally shifting for millenials.
    In the U.S., homeownership has been one of the most well-known wealth-building opportunities for families.  This opinion, despite the housing bust, largely has not changed.  What has changed is the ability to do so.  Student loan debt, especially for millenials, has risen significantly over the past decade.  According to an earlier Washington Post article by Dina ElBoghdady,  “ [student loan] debt has tripled from a decade earlier, to more than $1 trillion, while wages for young college graduates have dropped.”  This exorbitant debt, paired with lower wages, in many ways prevents millenials from being able to make other large purchases, including buying a home.  We can only imagine how this impacts millenials of Color, who on average incur $4,000 more of student loan debt, and receive less “head start” money from families.  It’s not that people prefer not to own a home; instead, systemic barriers prevent them from doing so.
     
  2. Demographic Shift, especially in regards to race, is central to any conversation on millenial homeownership.
    In talking about demographic shift in the United States, we’re not necessarily talking about the declining percentage of people getting married, or having children.  We’re talking about the rising percentage of people of color.  According to All-In Nation: An America that Works for All, a recent collaborative study by PolicyLink and the Center for American Progress, millenials will not be the only population where people of color are prevalent.  In fact, it’s projected that the entire United States population will be majority people of color by the early 2040s.  Even Chief Economist of Trulia, Jed Kolko, states in a recent article that the most glaring demographic shift was that of race.  Kolko noted that a key factor of low homeownership was the declining percent of “non-Hispanic white” people to 57 percent, a decline larger than any other factor.  What his evaluation means, in laymen’s terms, is that almost 50 percent of millenials are People of Color, and that this negatively influences homeownership rates.  What this data misses, however, is the persistent implications of race for millenials seeking to be homeowners.  What Badger brushes over in her response to Kolko is that white, middle-class millenials will still have it easier; and somehow this fact shouldn’t alarm us.
     
  3. We should be worried because according to this article, demographics of Americans are changing, but the demographic of homeowners is not.
    In other words, the same people who have been boxed out of homeownership in the past, will continue to be boxed out. By saying that “turning more millenials into homeowners… may not be the missing piece of the housing recovery” we ignore the crucial factors influencing homeownership rates.  It’s not that millenials don’t want to become homeowners.  Nor is it that the percentage of “non-Hispanic white” millenials is lower.  It’s that there are systemic barriers that have prevented people of color from homeownership, despite their income, despite their education, and despite their desire to own a home.  But what this leaves is a major opportunity.  An opportunity to change policy to fit the racial demographic shift in the U.S., thereby creating a more equitable economy.  This change does not come by discouraging millenials of Color from becoming homeowners, but by removing the barriers that they face to becoming homeowners.  Removing these barriers come in the form of transforming several current policies, including but not limited to how the U.S. deals with student loan debt and sustainable mortgage financing. Transforming these policies are significant steps toward becoming an equitable economy where millenials of Color can build wealth.
youth, economy