Source: Fortune
Summary
The Federal Reserve Bank of Minneapolis has introduced a new measure of homeownership, called the homeowners-to-population ratio (HPOP), which counts individual adults rather than housing units. This new measure reveals a significant split in homeownership rates along generational and intra-generational lines. For adults under 35, the traditional homeownership rate of 37% is actually 22% when using HPOP. The study also finds that 9% of all U.S. adults 18 and older live in an owner-occupied home as the child of the owner, and that this number is higher among younger adults.
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The numbers tell one story. The Minneapolis Fed’s new measure of homeownership reveals a widening age-based split in homeownership rates. The traditional homeownership rate hides the fact that many young adults are living in homes owned by their parents or partners. The study’s findings suggest that the youngest cohort’s trajectory has been worse than expected, with HPOP for 25-year-olds falling from 20% in 2006 to 12% in 2015, and recovering to only 14% by 2024. The data also shows that older millennials are pulling away from younger millennials in terms of homeownership and wealth accumulation.
The divergence in homeownership rates within the millennial generation is a pattern that has been flagged by other research, including a study by the Federal Reserve Bank of New York, which found that adults under 40 held just 4.9% of total U.S. wealth as of 2019. The data suggests that the story of millennial homeownership is not about one generation lagging behind or catching up, but about a fault line running straight through the middle of it, separating an aging cohort accumulating wealth from a younger one that is struggling to get on the housing escalator.
