The Millennial Homeownership Rate Is About the Same as it was 25 Years Ago

Somebody asked recently about the homeownership rate among millennials. I’ve posted about this before, but the chart had too little detail to really see what’s going on. So here it is:

You might be surprised that the homeownership rate among young familes is nearly the same as it was in 1994. But you shouldn’t be. It’s true that home prices have gone up a lot in the past couple of decades, but remember two things: (a) prices have truly skyrocketed only in a small handful of hot cities, and (b) mortgage interest rates have declined a lot. Back in 1994 your 30-year loan came with an interest rate of over 9 percent. Today it’s a bit over 4 percent.

When you take mortgage rates into account and look at monthly payments as a percent of income, prices have been steadier than most people think. Here it is nationally:

The average monthly home payment has stayed remarkably stable since 1994. Here are average monthly payments for three big cities:

In order to calculate monthly payments as a share of income, I used income figures that are averages for the whole country since that’s all I’ve got. However, it’s worth noting that average incomes are higher in big cities, so the percentage of income it takes to buy a home is actually significantly less than these charts show. But the important thing isn’t really the absolute percentage anyway, it’s the change over time, and these charts show the change accurately.

Bottom line: Average monthly payments are up about a third in Los Angeles, but down a bit in New York and down a lot in Atlanta. With the exception of a few super-hot cities like San Francisco and Seattle, young buyers today face about the same cost to buy a home as young buyers of 25 years ago. So it’s not that big a surprise that homeownership rates among millennials aren’t really very different than they were among Gen Xers in the 90s.

POSTSCRIPT: Home prices are based on HUD data for the national series and on Case-Shiller indexes for the three city series. I assume a 10 percent down payment. Mortgage rates are from Freddie Mac. Median household income for 25-34 year-olds is from the Census Bureau.

WE'LL BE BLUNT:

We need to start raising significantly more in donations from our online community of readers, especially from those who read Mother Jones regularly but have never decided to pitch in because you figured others always will. We also need long-time and new donors, everyone, to keep showing up for us.

In "It's Not a Crisis. This Is the New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, how brutal it is to sustain quality journalism right now, what makes Mother Jones different than most of the news out there, and why support from readers is the only thing that keeps us going. Despite the challenges, we're optimistic we can increase the share of online readers who decide to donate—starting with hitting an ambitious $300,000 goal in just three weeks to make sure we can finish our fiscal year break-even in the coming months.

Please learn more about how Mother Jones works and our 47-year history of doing nonprofit journalism that you don't find elsewhere—and help us do it with a donation if you can. We've already cut expenses and hitting our online goal is critical right now.

payment methods

WE'LL BE BLUNT

We need to start raising significantly more in donations from our online community of readers, especially from those who read Mother Jones regularly but have never decided to pitch in because you figured others always will. We also need long-time and new donors, everyone, to keep showing up for us.

In "It's Not a Crisis. This Is the New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, how brutal it is to sustain quality journalism right now, what makes Mother Jones different than most of the news out there, and why support from readers is the only thing that keeps us going. Despite the challenges, we're optimistic we can increase the share of online readers who decide to donate—starting with hitting an ambitious $300,000 goal in just three weeks to make sure we can finish our fiscal year break-even in the coming months.

Please learn more about how Mother Jones works and our 47-year history of doing nonprofit journalism that you don't elsewhere—and help us do it with a donation if you can. We've already cut expenses and hitting our online goal is critical right now.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate