This much is obvious: Young people don’t buy homes like they used to.
In the aftermath of the recession and weak recovery, the share of 18- to- 34 year olds—a.k.a.: Millennials—who own a home has fallen to a 30-year low. For the first time on record going back more than a century, young people are now more likely to live with their parents than with a spouse.
It’s become en vogue to argue that young people’s turn against homeownership might be a good thing. After all, houses are not always dependable investment vehicles, a lesson the country learned all too painfully after the Great Recession. Without being anchored to any one city from their mid-20s and into their 30s, young people who don’t own are free to roam about the country in search of the best jobs. What’s more, given the copious advantages of a college degree in this economy, perhaps many young people could be commended for investing in their intelligence, professional networks, and abilities rather than devote that same income to a roof, floor, and furniture.
But in the noble rush to overturn tired stereotypes about Millennials being an undifferentiated blob of privileged mewling, some analysts are missing a deeper story, which is that the decline in homeownership is a bifurcated phenomenon, with two extreme adulthood tracks that have emerged in the last few years: the supermobile and the stuck. And each has its own deleterious effect on the housing market.
On the first track, there are high-achieving students, who disproportionately come from richer districts. This group is more likely to move away to go to college and then settle in one of a handful of dense cities, where they delay buying a house (and delay starting a family) in order to rent throughout their 20s and focus on their careers. For example, about half of college graduates are working outside their state of birth by the age of 35. This group is also mostly white. They are the supermobile: ambitious, devoted to their professional lives, and comfortable with a life path that has them getting married in their late twenties-to-mid-thirties.
It sometimes seems as if this group has given up on homeownership. But it’s more accurate to say that they’ve merely hit the pause button on parenthood and mortgages. For the supermobile, one might say, your 30s are the new 20s.
The second track is different in almost every way. Millennials who grow up in poor neighborhoods are less likely to move, less likely to go to college, and even if they go to college, they are less likely to leave their zip code. Drawing on the work of New York University sociologist Patrick Sharkey, Richard Florida wrote that 70 percent of black residents in America’s poorest and and most segregated neighborhoods "are the children and grandchildren of those who lived in similar neighborhoods 40 years ago.” They are stuck.
The primary reason that the U.S. now has a record-high number of 18-to-34 year olds living with their parents is not because some rich white twentysomethings are taking a year after graduation to save money. It is because black and Hispanic Millennials who didn’t go to college, or did not finish college, are more likely to live with their parents than any time since the late 1800s.
Economic writers sometimes say that the silver lining of being a young renter rather than a young buyer is that renters have more flexibility. But poor young people who didn’t go to college and are living at home are not hallmarks of a flexible lifestyle. They are products of a poor neighborhood with a centripetal power over its residents, binding them in place when they might be better off moving cities. Indeed, one of the sad ironies of this juxtaposition between the supermobile and the stuck is that the students who'd most benefit from mobility are stuck in place; those needing the biggest boost are on the slowest escalator.
The decline in Millennial homeownership today is a single simple statistic masking a complex distribution of motivations. Rich, urban, college-educated, and supermobile Millennials have elected to trade their 30s for their 20s when it comes to buying a home. Meanwhile, poorer, less-educated, and stuck minorities have often traded homes and apartments for their childhood bedroom. Only one of these trends is worth cheering.