First, some background. The 30-to-34 age group is critical for home buying. This is when the homeownership rate surpasses 50 percent of households, a fact recorded each year by the Census Bureau's Housing Vacancy Survey for nearly three decades. In 2010, 36.8 percent of householders aged 25 to 29 owned a home, as did 51.6 percent of those aged 30-to-34.
Here's the catch. Those 30-to-34-year-olds in 2010 were 25-to-29-year-olds in 2005. So let's take a look at what happened to the cohort's homeownership rate over those five years. In 2005, the homeownership rate of 25-to-29-year-olds was 40.9 percent. In 2010, the homeownership rate of 30-to-34-year-olds was 51.6 percent. So far so good--a big increase in the cohort's homeownership rate! But this increase is far smaller than the one experienced by 25-to-29-year-olds as they aged into their early thirties between 1995 and 2000. In fact, it is only about half as big (10.7 percentage points versus 20.2 percentage points). The gain is also smaller than the one that occurred to 25-to-29-year-olds as they aged into their early thirties between 1985 and 1990 (14.1 percentage points).
Here's the bottom line: Over the past few years, householders aged 30 to 34 experienced a bigger decline in homeownership than any other age group, their rate falling from 56.8 to 51.6 percent between 2005 and 2010. Behind the decline is the fact that millions of young adults--as they enter this critical age group--are deciding they do not want (or cannot afford) to buy a home.