- More millennials became homeowners than any other generation in 2020, per an Apartment List report.
- At the same time, more millennials now believe they’ll never own a home; 18% plan to rent forever.
- This disparity is evidence of a wealth gap between the “millennial rich” and “millennial poor.”
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One only has to compare millennials’ homes to see just how big the intragenerational wealth gap is.
More millennials bought homes in 2020 than any other generation did that year, according to Apartment List’s Homeownership report. But at the same time, more millennials also now believe they’ll never be able to own a home – 18% said they plan to rent forever, up by 9% percentage points from the previous year.
The report looked at data from the US Census Bureau and its annual Apartment List Renter Survey, which polled 1,851 millennials.
The millennial homeownership rate has climbed to 47.9% from 40% just three years ago, according to the report. It’s a sign that millennials, who turn ages 25 to 40 in 2020, are entering prime homebuying years. Interest rates hit a historical low in 2020, making it easier for those who have enough money saved for a down payment to buy a home.
But the demand for homes has also driven housing prices up, in turn driving homeownership even further out of reach for a generation famously late to joining the ranks of homeowners. Of the 80% of millennials who do plan to buy a home in the future, per the report, 63% don’t have the money for a down payment. There’s an 18% cohort that plans to rent forever, and 74% of them cited affordability as the main reason.
For over a decade, millennials have been facing an affordability crisis marked by astronomical student-loan debt, soaring living costs, and the battered job market and stagnant wages left behind by the Great Recession. The coronavirus recession is just the latest obstacle hindering the generation’s ability to build wealth – for some members, the second historic recession of their young adulthood.
The pandemic has intensified a millennial wealth gap
This stark difference in millennial homeownership mirrors the divide between the “millennial rich” and the “millennial poor” that the pandemic has exacerbated.
“This pandemic is widening economic inequalities within millennials, with some millennials relatively unscathed economically and others just completely financially devastated by unemployment losses, increased childcare costs, lost economic opportunities, and lingering health problems that they or family members are going to experience,” Christine Percheski, demographer and associate professor of sociology at Northwestern University, previously told Insider.
There’s a smaller group of wealthier millennials that has stayed employed, able to spend less disposable income and build up their savings, she added. Homeownership has become more attainable for this group, while becoming less attainable for those struggling with job loss and pay cuts.
Now, that’s not to say all those who plan to rent forever can’t afford homes. Some millennials actually prefer to rent. Roughly one-third of respondents in the Apartment List report said they prefer the flexibility of renting, while the same amount said they didn’t want to deal with the hidden costs of homeownership. And 21% deemed it a financially risky commitment.
But affordability remains the driving factor among those who aren’t buying homes, and lies at the heart of the millennial wealth gap.
At the core of such inequality is racial disparity. More white millennials are homeowners than other non-white groups, according to the report, and the lowest homeownership rates in the generation belong to Black millennials. At age 30, 51% of white millennials own homes, more than double the 20% of Black millennials who own homes at that age.
As Rob Warnock, research associate at Apartment List, wrote in the report, “The economic inequalities that contribute to low millennial homeownership are strengthening, not weakening.”
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