The goal of owning a home and moving into the middle class has been a key part of the American Dream for generations. However, millennials are finding themselves stuck in either renting or living at home with their parents.
Vice reported last month that homeownership among people under 35 was 34.7 percent, nearly 10 points lower than it was in 1980.
Millennials are flocking to high- priced rental markets like San Francisco, New York, and Washington D.C. where they’re using a greater percentage of their income to just pay the rent. A 2014 survey from the American Community Survey showed that 21.3 million Americans were paying more than 30 percent of their income in rent, many of them being millennials.
“(It’s a) vicious cycle,” Zillow’s chief economist Svenja Gudell said to Vice. “Renters who pay these high rental rates are unable to save…which means they stay renters longer, which means the overall pool of renters continually increases, and therefore rents keep rising… and it’s very hard to break out of it and become a homeowner.”
Moving back in with parents or having roommates into your early 30’s has become an alternative while millennials begin to save for a downpayment.
The new economy offers another alternative, telecommuting and working from remote locations.
This may be why millennials in some areas can purchase homes at a much higher percentage than the rest of the nation. The small satellite cities outside Sacramento, California for example have a millennial homeownership rate of 60 percent.
According to Builderonline.com, the Northeast has the lowest rate of millennial homebuyers, while places like Sioux Falls, S.D.; Omaha, Neb., and Cary, N.C. have much higher rates of homeownership.
So homeownership is possible for millennials, but they may not be living in a major metropolis or have to live with mom and dad for a few more years.