Tight credit, still elevated unemployment, and mounting student loan debt among young Americans are keeping millennials and other first-time home buyers out of the market.
That's one finding of the annual "State of the Nation's Housing Report" just released by the Joint Center for Housing Studies of Harvard University, which defines a millennial as a young adult born between 1985 and 2004.
The report also concludes that the US housing recovery "should regain its footing." According to the report, household growth has yet to fully recover from the effects of the recession.
"The housing recovery is following the path of the broader economy," Chris Herbert, a center research director, said in a statement. "As long as the economy remains on the path of slow, but steady improvement, housing should follow suit."
The number of households with adults in their 30s should increase by 2.7 million over the coming decade, the center projects, and key to how that age demographic will affect the housing market is for the economy to grow to the point where their incomes start to rise. At the moment, many young adults are living with their parents.
The report noted that by 2025, minorities will make up 36 percent of all US households and 46 percent of those aged between 25 and 34, thus accounting for nearly half of the typical first-time home buyer market.
"Ultimately, the large millennial generation will make their presence felt in the owner-occupied market," Daniel McCue, center research manager, said in a statement, "just as they already have in the rental market, where demand is strong, rents are rising, construction is robust, and property values increased by double digits for the fourth consecutive year in 2013."
A sentence from the report’s executive summary: “After kicking off 2013 on a strong note, the single-family market slowed noticeably in the second half of the year --- even before the unusually harsh winter took its toll. By the first quarter of 2014, housing starts and new home sales were down 3 percent from a year earlier while existing home sales were off by 7 percent.”
Chris Reidy can be reached at firstname.lastname@example.org.