Waiting Longer to Buy a House Could Hurt Millennials in Retirement

The researchers found homeownership declining most steeply among people under the age of 30 when compared with other generations. “They’re not able to hit the mark at the same age as their parents,” said Tamara Sims, a research scientist at Stanford.

Homeownership among early millenials (born 1980-84) at 30

 

Homeownership among baby boomers at 30

 

Why the delay? People often want to put down roots once they have a family. Indeed, the likelihood of owning a home by the age of 30 swells by nearly 30 percentage points for those already married and with children.

But younger people today are not in a rush to wed and reproduce.

In 1960, the average age women and men first married was in their early 20s. Today, the median age for a first marriage is closer to 30. Meanwhile, the share of married households with children, aged 18 to 34, dropped to 25 percent in 2015, from 37 percent in 1990, according to the Urban Institute, a progressive think tank in Washington, D.C.

The growth in student debt is another factor explaining the decline in homeownership among the young. Average debt at graduation is currently around $30,000, up from an inflation-adjusted $16,000 in the early 1990s.

Those who are still repaying their student loans at 30 are 32 percentage points less likely to own a house than those who never borrowed for their education, the researchers at Stanford calculated.

As a result of purchasing property later in life, Sims said, millennials may enter old age with less financial security.

“Homeownership is one of the touchstones of being prepared for retirement,” she said. “Buying a home at age 50 or 60 isn’t going to do you much good in funding a 30-year retirement.”