Millennials may represent the largest share of mortgage borrowers in today’s market, but according to a new report, they may not be transitioning into homeownership as much as in previous years.
A study from personal-finance website ValuePenguin found that the population of homeowners under age 35 fell by 20% — almost 1.9 million homeowners — between 2009 and 2016. There were about 9.2 million under-35 homeowners in 2009 but by 2016, that number had fallen to 7.3 million.
Moreover, in 2009, households that owned a home and were headed by someone under age 35 accounted for more than 12% of all U.S. homeowners. That share, however, has dropped steadily since then, falling to a low point of 9.8% in 2016.
Meanwhile, the split between owning and renting among under-35 household during the same time frame has tilted steadily toward renters. In 2009, of the 23.8 million under-35 households, 38.7% were homeowners compared to 61.3% who rented. In 2016, out of the 22.5 million under-35 households, the homeownership share had fallen to 32.6%, compared to 67.4% who rented.
Additionally, the number of under-35 households fell by 1.3 million between 2009 and 2016. Renters under 35, however, grew in number nearly every year during that eight-year span, suggesting that most of the decline of under-35 households was due to shrinking homeownership rather than a decline in renters.
“This suggests that, in most years, non-millennial homeowners who aged out of the under-35 group were not being replaced by an equal or greater number of first-time millennial homebuyers,” ValuePenguin research analyst Chris Moon wrote. “Meanwhile, the renter population grew slightly as some of the youngest millennials formed independent renter households for the first time.”
The study’s latest numbers, however, could signal a potential trend reversal. In 2017, millennials increased their share of the overall homeowner population for the first time since 2009. It also was the first year that the split between under-35 owners and under-35 renters shifted toward the ownership side, with homeowners gaining 0.4 percentage points. Under-35 households also grew from 22.5 million to 22.7 million, the first increase in nine years.
ValuePenguin’s study also noted that these numbers don’t necessarily mean that more millennials are foregoing homeownership altogether, nor does it suggest that millennials are less enthusiastic about the concept of homeownership than in previous years.
“The growth of renters relative to homeowners may be an indication that younger households are less willing or less able to meet the extra costs of owning a home,” Moon said. “However, it remains to be seen whether these households are delaying homeownership or rejecting it outright.”