Builders may need to start buffing up their sales pitches for first-time buyers. A new report by the Pew Research Center suggests that young Americans—those between 18 and 35 years old—are not as interested in making big-ticket purchases such as a house or car that require borrowing money as their counterparts in the past.
Compared to their peers of just a decade ago, today’s young Americans are less likely to:
- own a home (34% in 2011 versus 38% in 2001),
- have a mortgage (35% in 2010 versus 38% in 2007),
- own a car (66% in 2011 versus 73% in 2007), or
- have a car loan (32% in 2010 versus 44% in 2007).
Of course, given the economy of recent years, such numbers make sense. Without a job, a young adult has little hope of moving out and getting his or her own place or buying a car. “Adults of all ages, but especially young adults, are less likely to ‘launch’ and form independent households since 2001,” say the Pew researchers. In 2001, they note, every 100 young adults produced 40 young adult households; in 2011, that same number of people generated just 33 young adult households.
Once established, the young adult households of today aren’t as dedicated to homeownership as those in the past, whether for lifestyle or financial reasons, according to the report. While in 2001, the numbers of young renters buying homes (1.3 million) and those choosing to rent (1.4 million) were roughly equal, that balance had changed a decade later. In 2011, nearly 1.5 million young adult homeowners returned to renting, while just 871,000 young adult renters purchased homes.
In “Young Adults After The Recession: Fewer Homes, Fewer Cars, Less Debt,” the Pew researchers suggest that the economy isn’t the only factor in these Americans’ choices about homeownership and other financial and life milestones. “These shifts in the debt profile of younger adults reflect a broader societal shift toward delayed marriage and household formation that has been underway for decades.”
To read the full study, click here.