Heard on the Street: The tepid housing market is still waiting for a buying surge from the generation that entered the workforce during the recession. It may never come.
Illustration: ROB WILSON By Justin Lahart Updated May 17, 2019 9:15 a.m. ET More than a decade has passed since the financial crisis hit, yet the housing market remains in a deep funk. Fear not: A wave of millennial buyers is about to hit the scene.One of the weirder things about the current economic recovery is how little housing has contributed to it. Unlike past expansions, which have tended to start with a flurry of home buying, the housing market remains deeply depressed.
But people have been talking for a while now about how millennials are going to reinvigorate the housing market, and so far they haven’t. The homeownership rate among households headed by someone under 35 was 35.4% as of the first quarter, according to the Census Bureau. In 1999 that level was about 40%.
As a result of millennials’ delayed entry into the workforce, it is probably taking them longer to develop the financial wherewithal to buy a home. Many also are saddled with higher levels of student debt than previous generations, making mortgage approvals more daunting. Moreover, the tough labor market they faced early in their careers may have delayed other life events that often coincide with the decision to own a home.
Changes in the regulatory and financial environment have also made homeownership less enticing, according to Bank of America Merrill Lynch economist Michelle Meyer. Up until the crisis, government officials considered increased homeownership desirable, claiming it helped Americans accumulate wealth and build healthy communities. That notion has lost some currency, and the 2017 tax cuts actually reduced the financial incentives for homeownership.
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