For decades, baby boomers drove existing homes sales. Now, shifting demographic trends are putting the brakes on home sales. Many cash-strapped millennials — saddled with high levels of student debt — are unable to purchase a home because low-paying jobs and rising home prices. In California, for example, 2.3 million young adults are living at home with their parents, according to a UCLA study.
Multi-generational Housing Rising
“For a variety of reasons — lack of a job, job loss, divorce, home foreclosure — more than 2.3 million adult children in California were living with their parents in 2011, 63 percent more than in pre-recession 2006,” the UCLA report finds. “There were 433,000 older adults, age 65 and over, who housed approximately 589,000 of those adult children.”
Clearly, young households are simply not buying homes. They are either renting or doubling up with their parents in multi-generational housing.
“A college degree is no guarantee of a job today, and an unprecedented number of families have been forced to return to a multi-generational household,” said Steven P. Wallace, associate director at the UCLA Center for Health Policy Research and a co-author of the study. “Until the economy provides the kinds of jobs that allow all adults to be self-sufficient, families will need help.”
Simultaneously, the housing crash has forced many former homeowners into a growing renter class, driving homeownership numbers downward. Homeownership rates are at a 19-year low. The share of Americans who own their home was 64.7 percent in the second quarter, down from the peak of 69.2 in June 2004, according to the U.S. Census Bureau.
The homeownership rate is being held back by slow job growth, declining affordability (rising prices) and the tight mortgage market. Indeed, this is not your typical housing market. We are starting to see the affects when investors pull out of the market. Sales stall and prices fall.
But some see hope.
Fannie Mae’s Christina Diaz-Malone believes the future of housing is Hispanic buyers.
“If you are wondering who tomorrow’s homebuyers will be, look no further than the nation’s fastest-growing population segment — Hispanics,” writes Diaz-Malone. “With population growth that is expected to more than double to about 128 million by 2060, Hispanics are poised to lead housing demand in the coming years.”
At 54 million strong, Hispanic consumers have a purchasing power of nearly $1.5 trillion annually, according to U.S. Census Bureau. Moreover, they are younger than the general population and many are just entering the workforce.