Young Adults Are Avoiding Homeownership In Favor Of Renting Due To Economic Recession Concerns
A large amount of young adults in the US are avoiding homeownership in favor of renting properties, according to new economic data reported by Forbes. Affordability for homes across the country has been consistently increasing, beyond that, the flexibility of renting makes young residents resilient to economic downturns.
From the 1980s to the 2010s, the average age of first-time homebuyers was late twenties to early thirties. Now, according to the National Association of Realtors, the average age of first time homebuyers in 2024 was 38, an all-time high. NAR also reported that 33% of 27-year-olds owned their home in 2024, compared to 40% of baby boomers when they were 27.
First-time home buyers are currently facing high home prices and high mortgage rates. Even though housing affordability slightly improved last year, the supply of available homes continued to increase, showing a lack of transactions.
Buyers can, and have, utilized the high supply of homes to negotiate lower pricing, however, the general trend is clear; young adults are embracing rentals and avoiding buying.
According to Forbes, lot of young adults opt for renting because they feel it gives them the flexibility they may need in the event of a potential recession. The Census Bureau reported that people who move to metropolitan areas for work tend to find more success than those who remain where they are while looking for a new job.
The job market is particularly hard to break into in multiple sectors. Many renters are ready and willing to move in order to find the most well-paying job, and by renting instead of buying, they have the flexibility to continue to move should they need to change occupations again.
The pandemic also caused a massive influx in remote working, which allows many renters to work for jobs that may be based outside of their city. Initially, this trend in working from home actually increased the amount of people who were buying homes, especially considering prices for homes dropped in many areas around the US during the pandemic as well.
However, now that we’re no longer living in quarantine, 30-year fixed mortgage rates have more than doubled what they were in 2021, according to reports.
Young people are also paying great attention to climate change and the devastating impact it has on the economy. Due to the fact that young adults will experience more consequences of climate change than older people, they’re hesitant to make any housing investments due to the financial impact climate change will have in the future.
The US also experienced a massive increase in the development of multi-family homes that remain vacant. This influx in available properties is actually causing landlords to avoid rental increases as a means of maintaining their tenants.
“Household growth is slowing, which could mean less demand and lower prices for homes in the future. However, the uncertainty in the economy could continue to make the flexibility of renting more appealing than the commitment of homeownership,” Daryl Fairweather, a real estate contributor for Forbes, wrote
“When every election is the most critical election so far, and every year the nature of work shifts with the culture, and every year there’s a record breaking natural disaster, it’s hard to imagine young adults wanting to anchor themselves in place with homeownership.”
Eric Mastrota is a Contributing Editor at The National Digest based in New York. A graduate of SUNY New Paltz, he reports on world news, culture, and lifestyle. You can reach him at eric.mastrota@thenationaldigest.com.
