Millennials Are Moving Less: Are They Financially Doomed?

Millennials Are Moving Less: Are They Financially Doomed?

Americans have long been known to be frequent movers; they are always on their feet, always in search of opportunity from one place to another. But a recent Pew Research Centre analysis found that rates of geographic mobility are declining.

This is because the Millennial generation is moving less than their older counterparts. Those who were born between the years 1980 and 1996 are considered to be part of this young generation. And while they have the reputation of being spontaneous and unrestricted, Millennials are—surprisingly—more rooted.

According to the 2016 data, only 20% of Millennials between the ages 25 and 35 had changed addresses within a year. Annual migration rates were higher with the older generations. Gen-Xers, for instance, had a one-year migration rate of 26% when they were within the same age range in 2000. The Silent Generation, those who were within the 25-to-35 age range in 1963, had a mobility rate of 26%.

This seems unlikely for a generation that has fewer issues to worry about. One, Millennials are marrying late. Two, majority are childless. And three, most live in rental units instead of a house. Who what’s keeping them stuck?

The reason: Millennials aren’t buying homes like their predecessors do.

In 2016, millennial homeownership dipped to its lowest level in 40 years. One reason may be that since more Millennials are having children late, they don’t have a major reason to own a home. Another reason is that the modest jobs recovery after the Great Recession are not motivating Millennials enough to search for job opportunities elsewhere.

But there may be financial considerations, as well. One factor is the tighter credit standards, which makes it difficult for 25-to-35 year olds of today to get a mortgage, compared to credit standards in 2001, during which Gen-X young adults were buying houses. According to the Census Bureau Survey, only 6% of Millennials who moved in 2016 did so because they wanted to buy a house. However, in 2000, the percentage of Gen-X movers who were buying a house was 14%.

Most Millennials said that while they do want to buy a home, they think it’s unattainable due to stricter credit score requirements. According to a NerdWallet survey, majority of Millennials who want to buy a house fall below the median credit score of 750 that would allow them to obtain a loan from Fannie Mae, one of the country’s biggest lenders. The average earnings for 18-to-34-year old full-time workers are down 9% between the years 2000 to 2013. More 18-to-34-year-olds lived with their parents in 2014, because they may not be financially capable of owning their own houses.

The research also cited student debt as another factor that’s keeping Millennials from buying homes. According to The Institute for College Access and Success, student debt has risen 56% in the last 10 years to an average of $28,950 for every debtor.

The Millennials’ lifestyle choice may be adopted by generations to follow, and this may present problems to the real estate industry. But it can be more accurate to assume that the young generation is simply taking their time to get into the groove of building a family or building a home. To them, it could be that 30s is the new 20s.

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