Family tradition: Kids are more likely to own a home if their parents did

According to data from University of Michigan’s Panel Study of Income Dynamics, children raised in homes that their parents owned were nearly three-times as likely to buy a home themselves. This recent Trulia article by Felipe Chacón, explains the findings of this study and how homeownership is strongly influenced by family.

The recent revelation that homeownership among American households at a 51-year low, has ignited a national discussion about the value of homeownership. It’s also having a fallout in the public policy arena: what’s causing the erosion of the “American Dream” is back as an issue in presidential politics.

It’s also a trend that persists as those kids get older and make more money – there is an 79% chance someone who is 40, has a household income of $100,000 annually and grew up in a family-owned home themselves became homeowners, compared to a 56% chance for someone whose parents rented.

That’s a pretty strong correlation, which makes what’s happening to millennials worth noting. Compared with Gen-Xers, those aged 19 to 34, are less likely than people of other age groups to have grown up in a home owned by their parents. This suggests that, millennials could be less likely to own a home when they reach prime home-buying age even before considering student debt burdens and lower wages for those who hit the labor market during the recession.

To be sure, homeownership is not without financial risks and is not the only way to store and generate wealth, nor is it even the best. In a world of limitless ways to spend money though, homeownership has remained reliable means of forced savings, even during the tumultuous past decade.

[Read the full article here]

Anna Young