The millennial homeownership rate for millennials in the Boston area is 31 percent, compared with 43 percent nationally, according to a new report from real estate listings and research site ApartmentList. What’s more, any recession due to the fallout from novel coronavirus is unlikely to change the calculus.
The ApartmentList report underscores the existing difficulties that young adults face regionally when it comes to purchasing a home (and why so many expect to rent long-term). These barriers are familiar, and include the lingering economic aftershocks of the last recession in 2007-2008, student debt, and the Boston area’s perennially high prices and largely static supply.
And the difficulties appear to be unique to millennials—those born after 1980—compared with their most immediate predecessors. According to ApartmentList, for instance, 43 percent of millennials in their 30s own a Boston-area home. A generation earlier, the regional homeownership rate of Gen Xers in their 30s was 53 percent.
“Across generations, we don’t see a significant difference between baby boomers and the silent generation [those who came of age after World II],” Rob Warnock, a research associate at ApartmentList, said over email. “Gen X homeownership drops off slightly in the 40s and 50s, but the major gap is with millennials. Millennials appear to be falling behind faster in Boston metro than they are in other parts of the nation.”
The below chart from ApartmentList breaks down more clearly the percentages of each generation that owned a home by a certain age range, both nationally and regionally.
Much of the above is a function of those high housing prices. A new recession is unlikely to bring them crashing down, however, and put more homes within the reach of millennials. At least that’s what the statistics from the last—foreclosure-induced—recession 12 years ago ago suggest.
For instance, the median condo sales price for Boston in 2007 was $505,000, according to the Warren Group, a local research and publishing firm. In 2009, after the stock market tumble as well as the collapse of Bear Stearns and Lehman Brothers, the median was $515,000. It didn’t drop much in between either: In 2008, the median Boston condo sales price was $545,000.
There were similar storylines in other cities and towns in the region. In Cambridge, the condo median was $407,500 in 2007, and $408,000 in 2009. In Somerville, $352,500 in 2007, and $360,000 in 2009. And similar numbers could be found for single-families, too, according to the Warren Group.
Regional home prices continued to hold their own through the recession and then really picked up in 2013, Warren Group CEO Timothy Warren Jr. said. “And they’ve been going up steadily since.”
As for sales, they might’ve dropped in places, but not precipitously, and they too soon famously mounted as the economy, nationally and locally, started a decade-long bull run.
This time around is different, too, with stronger lending and underwriting standards in the housing market, Warren said, and less of what former Federal Reserve Chairman Alan Greenspan once called “irrational exuberance” in the marketplace (he was talking about the dot-com bubble of the 1990s, but the phrase stuck around for the next decade).
Plus, mortgage rates remain at historic lows, a reality that will probably endure under any federal stimulus and whatever a fresh recession.
The lower rates and the tougher standards are likely to keep other prospective buyers in the Boston-area housing hunt and prices therefore as high as usual. That will continue to put millennials at a generational disadvantage.