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Jed KolkoSenior FellowTerner Center for Housing Innovation at University of California, Berkeley
Millennials are waiting longer than previous generations to start families, but they’re still interested in becoming homeowners. Jed Kolko, senior fellow at the Terner Center for Housing Innovation at University of California, Berkeley, spoke with eMarketer’s Maria Minsker about the factors that may prevent millennials from owning their own homes.
eMarketer: Are millennials skeptical about owning their own homes?
Jed Kolko: One of the biggest ways that millennials differ from previous generations is they’re getting married and having kids much later. Once we take that into account, millennials are actually as likely to own a home and as likely to live with their parents as young people were 20 years ago.
Millennials are very interested in homeownership, but most millennials are still very young. For folks in their early 20s, homeownership might still be 10 years away.
eMarketer: Are millennials flocking to cities and leaving the suburbs?
Kolko: That is true for college-educated millennials, and it’s especially true in urban parts of big cities. They’re really into high-rise neighborhoods, which have seen a big increase in well-educated young residents.
But most cities are not made up of these hyper-urban neighborhoods, so when we look more broadly at millennials as a whole, they’re actually less likely to be living in urban neighborhoods than young people were a decade or so ago.
eMarketer: Is the current below-average rate of homeownership among millennials related to the Great Recession or other turmoil in the housing market?
Kolko: The biggest reason is the long-term shift toward marrying and having kids later. The homeownership rate is lower than it was a decade ago, with the anomaly being the years of the bubble—2005-2006. Since then the homeownership rate has returned to about where we would expect it to be, even with the delay in marriage and having kids.
eMarketer: What role does student debt play when it comes to millennials making down payments on a house and taking out a mortgage?
Kolko: Student debt makes it harder to pay the rent and harder to save for a down payment, but it also matters whether that student debt led to getting a degree.
Among people who took on debt but obtained a degree, their ability to eventually own a home is better, because having a college degree typically raises the income. The people who are most hurt are those who have debt but don’t have a degree to show for it.
eMarketer: What role does digital technology play in determining where millennials are settling down?
Kolko: Even though, in theory, digital technology makes it possible to do some things from anywhere, digital technology has strengthened the importance of cities, particularly in creating labor markets for digital skills that people want to be near.
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