When the housing market crashed 10 years ago, conventional wisdom held that millennials would become a nomadic generation — a generation that would eschew settling down due to the trials experienced by their parents during the recession of 2008. They became more risk-averse, afraid to meet the same fate of previous generations.

According to the Urban Institute, in 2015 37% of millennials were homeowners, an 8% decrease from Gen Xers’ and baby boomers’ homeownership rate at the same age (25–34). The various theories about the indifferent tendencies of the millennial generation are continuously being proven right, but not merely because of the housing crash.

Millennials And Gen Xers

While demographic and lifestyle choices, as well as a desire for nonconformity, have contributed to the high rates of renting over owning among millennials, one of the main factors pricing millennials out of homebuying is, ironically, high rents.

According to Zillow, typical rent payments in the U.S. require nearly 29% of the national median income — and over 30% in 14 of the largest cities. Saving money for a down payment while simultaneously paying a high rent is a mutually exclusive endeavor for many people. One analysis finds that baby boomers spent $148,000 on renting before buying their first home (adjusted for inflation), whereas millennials can expect to spend $202,000. That’s on top of the higher costs of living, such as groceries, transportation and recreation, which is compounded by the tendency of many of these younger generational populations to spend more money ordering prepared foods in, eating out and traveling.

While baby boomers and Gen Xers saw homeownership as an opportunity to build wealth and as a place to settle down, millennials do not. Millennials are often unable to forgo renting in favor of homeownership, in part because of the high cost of living in the cities they choose to live, as well as the high debt load they carry following graduation. This is potentially problematic for the financial future of their generation, as homeownership historically has been a tool for wealth-building in the United States.

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