In 2016, the homeownership rate for 25 to 34 year olds was 34.0 percent, down from 46.6 percent in 2006 and 41.0 percent in 2000. Rates of homeownership among Millennials households remain relatively low for a variety of reasons, some interrelated – uncertain economic prospects following the Great Recession, a tight mortgage market, rising student debt, lower rates of marriage and childbearing, low inventories of homes for sale that are affordable to first-time homebuyers. But there is still a lot of evidencethat younger households wants to become homeowners eventually. So what do we know about Millennial homeowners in the Washington DC region?
Approximately 41.1 percent of older Millennials are homeowners in the DC region, compared to 16.0 percent of younger Millennials. (Over 70 percent of households headed by someone over age 35 are homeowners.) Using microdata from the 2016 American Community Survey (ACS), I looked at the residential location patterns and characteristics of Millennial homeowners in the region. The maps below show the homeownership “hot spots” for older Millennials—27 to 35 year olds—and younger Millennials—19 to 26 year olds.
Homeownership “hot spots” are defined as places where homeownership rates for Millennials are more than twice as high as they are in the region as a whole. A “high proportion of homeownership” indicates places where the homeownership rate is between 20 to 50 percent higher than the regional average, and the “higher proportion of homeownership” indicates places where the homeownership rate is between 50 and 100 percent higher than the regional average. (Note: I used PUMAs instead of Census tracts because of sample size considerations.)
Despite the fact that Millennials are very concentrated in the region’s core, the pattern that stands out immediately in these two maps of Millennial homeownership is that Millennials are not buying houses in the core. The homeownership rates for Millennials are significantly lower in DC, Arlington, Alexandria and good portions of inner Montgomery, Prince George’s and Fairfax counties than they are more generally in the region.
There are no “hot spots” for homeownership (based on the definition above) among older Millennials; however, there are relative high proportions of older Millennials homeowners in the Olney/Clarksburg areas in Montgomery County, the Clinton/Fort Washington areas in Prince George’s County, much of Loudoun County, the Gainesville area in Prince William County and the Burke and Springfield areas in Fairfax County.
Among younger Millennials, there are striking hotspots of homeownership (e.g. where homeownership rates are three or four times higher than the overall homeownership rate for young Millennials) in Clarksburg/Olney, Frederick County, Charles County and Berkeley/Jefferson counties in West Virginia. Younger Millennials also tend to be concentrated as homeowners in the Wheaton/Glenmont portion of Montgomery County.
Therefore, young Millennial homeowners are very likely to be in more suburban and even exurban neighborhoods where home prices are lower and where there are more single-family homes (see below).
There does seem to be some evidence that younger Millennials are buying homes in closer-in neighborhoods than older Millennials are, particularly in parts of Fairfax and Montgomery counties. While homeownership may be out of reach in the closest-in neighborhoods, there may be a cohort of younger Millennials that have stronger preferences—and have the financial wherewithal—to buy homes in transit-accessible, more compact neighborhoods, and they are likely buying condos instead of townhomes or single-family detached homes. This pattern could also simply reflect the fact that this cohort is younger and less likely to be married or have children.
Among older Millennials homeowners, 14.8 percent live in a condominium in a multi-family building but that share is 19.8 percent for younger Millennials. Thirty-five percent of older Millennial homeowners live in a townhome, compared to 29.8 percent of younger Millennials homeowners. However, younger Millennial homeowners are just as likely as older Millennial homeowners to live in a single-family detached home. Half of Millennial homeowners in the region live in single-family detached homes (71 percent of older homeowners in the region are single-family home dwellers).
Housing Type – Homeowners in the Washington DC Region (2016)
This issue of financial wherewithal is really important. According to this ACS data, the median household income for older Millennials who are homeowners is $116,600 compared to just $78,500 for younger Millennials homeowners.
Future blogs will report out in more detail on the demographic and economic characteristics of Millennial homeowners and renters in the DC region. In the meantime, please don’t hesitate to reach out if you are interested in more information!