An interesting article in The Atlantic highlights the multiple reasons that young people aren’t buying houses, and among the more surprising is this simple fact – they aren’t getting hitched as young or as often:
“The 1980-2000 decline in young home ownership occurred as improvements in mortgage opportunities made it easier to purchase a home,” Martin Gervais and Jonas D.M. Fisher write in their seminal paper Why Has Home Ownership Fallen Among the Young? So we can’t begin by blaming too few available mortgages. Government interventions and mortgage innovations (remember subprime lending?) should have meant more young couples buying houses. With the rising employment and earnings of women, households should have gotten richer. That, too, should have increased homeownership. It didn’t.
Instead, we can begin by blaming a shortage of couples. The decline of marriage and the increase in “household earnings risk” account for practically all of the decline in young home ownership, Gervais and Fisher conclude. So, to understand the decline of young home ownership, we have to understand the decline of marriage.
Unfortunately, the decline of marriage isn’t an easier trend to unpack. I offered some thoughts here, which I’ll try to sum up in a sentence: Higher college-graduation rates have delayed marriage for many, and as women moved toward financial equality with men (and as technology made it easier to be alone) financially motivated marriages went down, and contently single ladies went up. “A decline in the incidence of marriage mechanically lowers home ownership,” Gervais and Fisher write.
But delaying marriage aren’t the only factors suppressing the rate of home buying in the young. Others include economic uncertainty, rising levels of student loan debt and stagnating wages over the last generation. It will be interesting to see if this is a long-term trend or a short-term hiccup in the seemingly inexorable climb towards universal (US) home ownership.