Dive Brief:
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Four in 10 individuals between the ages of 18 and 34 lived with their parents, siblings or other relatives in 2015, the most since 1940, according to an analysis from real estate website Trulia reported by The Wall Street Journal.
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The trend comes because of a confluence of factors — tighter lending standards, rising rents, high home prices and student debt — that are keeping this group, millennials, out of the housing market.
- Although millennials are delaying life events like marriage and having children as compared to previous generations, they are expected to double their current household count by 2025.
Dive Insight:
Millennials continue to face major barriers to entry into the housing market as they buckle under the weight of student debt, rising home prices and rents that have soared on the back of strong demand.
Despite the headwinds, there are signs that the recent trend could be slowly reversing after the National Association of Realtors reported last month that first-time buyers, who tend to be younger, accounted for 35% of home sales this year, up from 32% in 2015 and the highest share since 2013. It comes as a strong job market and high rents are encouraging many young adults to look toward homeownership for its ability to build equity.
But projections of further increases in mortgage interest rates and home prices could dampen activity in this segment of the market heading into next year as younger first-time buyers already face a tough lending environment.
In a report earlier this month, Black Knight Financial Services found that homes have become less affordable than they were before the general election in early November, which analysts say triggered a 50-basis-point rise in mortgage interest rates. Meanwhile, the Federal Reserve last week raised benchmark interest rates by 25 basis points, which will have an impact on the mortgage bond market.
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