Homeownership in America Has Collapsed—Don't Blame Millennials

Blame 35-to-44-year-olds, the true cheapest generation

Homeownership Rate, Seasonally Adjusted

The U.S. homeownership rate has fallen to a 19-year low. Why?

Let's begin with the youths, as we must. It is a truth universally acknowledged that a journalist in possession of a negative statistic must find a way to blame Millennials for it. In 2012, Jordan Weissmann and I observed that young people were turning away from homes and cars, the twin engines of the economy. Two years later, the homeownership rate is still declining for Americans under 35 (most of whom are Millennials, i.e. born between 1982 and 2000).

Millennials: No Houses for Us, Thanks

But there's another cohort turning away from homes even faster—Gen-X. That's right, Americans between 35 and 44 have had the sharpest drop in homeownership since the recession struck, far outpacing the national rate. (Pedant's note: Some people like to leave hateful comments about Y-axes that don't begin at zero, but it's almost impossible to see homeownership changes at that scale, so we're repeatedly violating that rule throughout this post.)

Gen-X: Fewer Houses for Us, Too

U.S. Census

Draw back the lens to 1994 to study the 20-year change in homeownership, and the evaporation of ownership among this age group is even more surprising. The entire country rode the roller-coaster of the 2000s, during which the total homeownership rate cracked 69 percent in 2004 and 2005. Since then, it's been one long tumble down the other side of the mountain. But for 30- and 40-somethings, the fall has been particularly steep.

What's the Matter with Fortysomethings?
U.S. Census

Indeed, if you reproduce this experiment for every age cohort, you arrive at a surprising picture (for Millennial critics, at least). In the last 20 years, homeownership has fallen less for young people than for any other age group under 64. Today's historically low homeownership rate isn't the result of the cheapest generation abandoning the housing market. It's their older cousins, Generation-X, who are really running for the exits.

Falling Homeownership: Who's to Blame?
U.S. Census

Since 1994, total homeownership is actually up .09 percent. But among the 35-44 crowd, it’s down 9 percent. What’s the matter with Millennials? No way. How about: What’s the matter with fortysomethings?
There is one more layer of demographics, according to Conor Sen. It’s generation size. Due to the trough in live births in the mid-1970s, the fortysomething crowd has fewer workers than the generation before it. This has created a weird situation in the labor force. There used to be 16 million more workers in the 35-44 crowd than in the 55+ cohort. Today, there are, insanely, more workers older than 55.

Older Workers In, Middle-Aged Workers Out

The economy has a Gen-X problem. It's a small cohort with a much-smaller-than-usual homeownership rate. And people wonder why the housing market is sluggish.

Update: Read Trulia's Jed Kolko on why the middle-aged are the true lost generation of homeowners. In short: They bore the brunt of the foreclosure crisis:

In 2005, the year when the true homeownership rate peaked for most age groups, 25-to-29 year-olds were the age group for which homeownership was highest relative to the demographic baseline, followed by 30-to-34 year-olds. These were first-time home-buyers getting easy credit for overpriced homes; then, they bore the brunt of the foreclosure crisis, losing their homes and wrecking their credit history...

The millennial generation was still in their early 20s or younger in the mid-2000s–too young to have bought during the bubble and then to have suffered a foreclosure: Only the oldest among the 18-to-34 year-old group in 2013 would have been of home-buying age during the bubble.