Yvonne Jimenez Smith and her husband, Brandon Smith, spoke in whispers recently as they visited a white stucco house they planned to buy on a leafy street in San Jose, California.
Following six months of aggressive hunting, they were on their way to a small suburban home of their own after spending most of their 20s in noisy city centers.
“It was so quiet, it just seemed weird to speak out loud,” Jimenez Smith said. “We lived over a freeway entrance in San Francisco. It was always loud and we were always surrounded by people. It’s a big change.”
Like the couple from San Francisco, who are 28 and 30, other millennials are starting to follow in the footsteps of earlier generations and buy suburban houses after fueling a boom in city apartments. The share of 25- to 35-year-olds who own homes, which had been falling since 2005 as renting grew in popularity, ticked up slightly in 2017, according to a Stateline analysis of census microdata from IPUMS-Current Population Survey.
Last year 32.3 percent of young people were homeowners, a slight increase from 2016 when it was 32.2 percent.
That’s still well below the 45 percent in 2005 and the peak of 55 percent in 1980.
Millennials are hitting the market at a difficult time, though, with rising prices and few houses to buy as the housing industry has shifted to building more downtown rentals. Some people seeking to buy houses have been discouraged and have postponed the step, just as many have had to put off moving out of parents’ houses, forming couples and having children as they tried to build careers delayed by the recession.
Between 2011 and 2017, home prices grew 48 percent while income for all age groups rose only 15 percent, according to National Association of Realtors statistics.
“It just feels irresponsible right now,” said Jayme Fraser, a 28-year-old freelance journalist who considered buying a house in Missoula, Montana, three years ago but found prices too high. She and her husband, who is in graduate school, are now looking for a more rural home in Montana they can afford to buy while paying off student debt.
Student debt is a big obstacle to buying a home for many millennials, said Jessica Lautz, director of demographics at the National Association of Realtors. The median student debt for millennials is $41,000, and they typically put off buying their first home for seven years after they wanted to buy, Lautz said.
Young people with college debt typically spend close to half of their income on loan payments, according to a 2017 study in The Journal of Consumer Affairs. This makes it almost impossible to qualify for a home mortgage with a small down payment.
“Contrary to popular opinion, millennials are not buying avocado toast instead of saving for a down payment. They’re paying their student debt,” Lautz said. “Somebody with $41,000 in student debt is going to be buying something far away with a long commute, or in a bad school district, or something too small. They’re not going to be able to stay there for long.”
Thirty-two is the median age for first-time homebuyers, according to…