Everyone knows that houses can be inherited, but can homeownership? It would seem that the answer to that question is “yes.”
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Homeownership is a Family Trait
Recently, the Urban Institute conducted research on homeownership rates among millennials. They found that homeownership appears to be a trait that can be passed from one generation to another. According to the research, young adults whose parents own their homes are significantly more likely to own a home than their peers whose parents are renters. Only 14.4% of millennials whose parents rent their homes become homeowners, but 31.7% of those whose parents own their homes also become homeowners. That's a difference of 17 percentage points!
The study found that the homeownership rate for 25-34 year olds was about eight percentage points lower than that of Gen X and Baby boomers when they were the same age. This lower rate of home ownership was attributed to a number of factors: increased education debt, delayed marriage and childbearing, increased rent, and even greater racial diversity among millenials.
Another Familial Factor
Interestingly, the study discovered another factor that affected millennial homeownership rates. This one, too, has to do with the parents of millenials.
The study found that as parents' net worth increased, so did the likelihood that their children would own a home. The graph below shows the correlation between a parent's wealth and a millennial's likelihood to own a home.
Build Wealth for Yourself and Future Generations
Houses play a significant, wealth-building role in the lives of millions of people in the United States. The most recent Survey of Consumer Finances conducted by the Federal Reserve found that the net worth of a homeowner is over 44 times greater than that of a renter.
For most Americans, a house is probably the single largest purchase they will make in their lifetime. If the findings from the Urban Institute are accurate, parents who decide to invest in a home are doing more than simply building up a future inheritance. They are passing on a greater likelihood that their children will build wealth for themselves.
If you want create this kind of legacy for your children, contact Mortgage Brothers LLC today and we'll help you get on your way!
Delve into the concept of whether homeownership can be passed down through generations and what that means for your financial future. Enhance your understanding by reading about securing a third mortgage, learning about optimal closing speeds, and discovering who can be on title.