WASHINGTON (AP) — Short of cash and unsettled in their careers, young Americans are waiting longer than ever to buy their first homes.
The typical first-timer now rents for six years before buying a home, up from 2.6 years in the early 1970s, according to a new analysis by the real estate data firm Zillow. The median first-time buyer is age 33 ? in the upper range of the millennial generation, which roughly spans ages 18 to 34. A generation ago, the median first-timer was about three years younger.
The delay reflects a trend that cuts to the heart of the financial challenges facing millennials: Renters are struggling to save for down payments. Increasingly, too, they’re facing delays in some key landmarks of adulthood, from marriage and children to a stable career, according to industry and government reports.
These shifts help explain why homeownership, long a source of middle class identity and economic opportunity, has started to decline. The share of the U.S. population who own homes has slid to 63.4 percent, a 48-year low, according to the Census Bureau.
And when young adults do sign the deed, their purchase price is now substantially more, relative to their income, than it was decades ago. First-time buyers are paying a median price of $140,238, nearly 2.6 times their income. In the early 1970s, the starter home was just 1.7 times income.
Millennials are “still very interested in buying a house, but they’re delaying that decision,” said Svenja Gudell, chief economist at Zillow. “Once they start having kids, they begin looking for homes. We’re also finding that ? given how much rental rates are currently rising ? a lot of folks are having a hard time saving for a down payment and qualifying for a mortgage.”
Millennials increasingly find themselves in a situation like that of Lou Flores, a 30-year-old portfolio manager in San Diego. He shares a one-bedroom apartment with his boyfriend, paying $1,400 a month to live within walking distance of Balboa Park and the zoo.
Flores’ parents had built their nest egg by steadily upgrading their homes, ingraining him with the notion that “renting was a waste of money.” But the median home in San Diego costs more than a half million dollars, according to the area’s association of Realtors.
So Flores figures ownership is at least a few years away.
“Here in California, if you’re not married or with someone, it’s impossible to buy a home without financial backing from your parents,” Flores said.
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