Race, Age, and Homeownership
In today’s times, young people are much less likely to own homes than they were in previous generations. There is also a trend in the race of those young people who are purchasing homes. Young adults who were white and falling in the age range of 18 to 34 had a homeownership rate of 42% between the years of 1999 and 2015 compared to the 18% of black adults of the same age. There is some research on how the financial status of parental figures affects homeownership in young adults of either race and it provides some insight into the reason behind this gap in homeownership.
Parental Homeownership & Income
A young adult who has parents that are wealthy is much more likely to own a home than those in different situations. Parents who own their own homes raise their child’s chances by up to eight percent. This is based upon the idea that parents who own homes are able to educate their children on the process and also the benefits that come with owning property and building equity at a young age. As parental wealth grows, so does their child’s chances of owning a home. A child whose family makes $300,000 is much more likely to own a home than a child whose family makes $200,000. This is because the more money a family makes, the more likely they are to assist their child with some aspect of purchasing their home. Race comes into play when you account for the fact that homeownership among black parents is 49 percent, which is 35 percent lower than white parents who come in at 84 percent. The average wealth of black families (a little under $15,000) is also around 15 times less than that of the average white families ($215,000). The gap between white and black young adults owning homes can likely be partially explained by these factors.
What About Stability?
Parents who have remained stable are also statistically more likely to have children who own their own homes, especially if they were stable from 1999 - 2015. Parents who did a mix of leasing and owning during this time do not have any real impact on their child owning a home. The chances of black parents owning and continuing to own a home for a period of time are much lower than white parents. 72 percent of white parents owned their homes for the duration of the aforementioned time period, however, only 31 percent of black parents did the same. Since black parents are more commonly found to move around and change ownership statuses, their children’s chances often drop significantly.
The Age Issue
While many young people are often perceived as having no drive or will to go above and beyond to succeed, this is not exactly the case. Young people want to secure their financial futures as much as anyone else does. Young people today face so many more major financial hurdles that they need to cross in order to eventually own their own home. For instance, the cost of furthering one’s education is at an all-time high, young people in past generations did not have to consider their cost of tuition or crippling amounts of debt when seeking out a home. The cost of schooling was much lower then. Nonetheless, young people are still closing on homes and millennials account for a decent percentage of homebuyers today. Back in the year 2018, the average age of someone purchasing property for the first time was 32; in the ’70s it was 29. It is safe to say that first-time homebuyers are closing on homes at a much older age than in the past due to factors such as the high amount of student loan debt mentioned previously. In 2018, millennials accounted for 36 percent of homebuyers, which meant they were the biggest generational group of buyers. The trend of young people purchasing homes is only projected to grow. Generation X came in at 26 percent. It is worth mentioning that most homebuyers are not doing so for the first time, this is why the average homebuying age in 2018 was around 46 years old. First-time buyers only account for around 33 percent of the market. This is not due to the fact that young people are not wanting to own homes, but simply the state of the market at any given time. It is clear that there is a significant gap between black and white homeownership, and this is based upon many factors. It is also evident that while young people aren’t buying homes like they used to, society has changed quite a bit since then. Everything is much more expensive and there is much more debt.