How did young adults fare during the 2008 real estate collapse and economic crisis? We know that younger families who were economically and racially disadvantaged had a greater amount of relative economic loss than their older counterparts. Consequently, there are signs that younger generations such as Millennials are more likely to delay the purchase of a home and live with parents well into adulthood than previous generations. A recent report by the Federal Reserve indicates that Millennials are experiencing a homeownership crisis. By the median age of 35, Baby Boomers owned about a third of the real estate share in the U.S. In contrast, Generation X owned only a fifth of the U.S. housing market by same age. Even more striking, Millennials currently own a mere 4% of the real estate share as of the median age of 30. This cohort will likely catch up as they get older but may never reach parity with Baby Boomers in acquiring housing wealth. Their spending and wealth accumulating behavior will undoubtedly influence the economy for decades to come. Not surprisingly, The New York Times, The Atlantic , Harvard Business Review, and other popular presses report that emerging adults during the Great Recession have higher levels of cynicism than previous generations.

Given these clear generational differences, our study examines the wealth and debt typologies that illuminate inequality during early adulthood – between the ages 26 to 34 – using the National Longitudinal Study of Adolescent Health (Modi and Sewell 2021). We focus primarily on young adulthood as it reveals the early mechanisms of wealth building and wealth inequality. Why does the early onset of inequality matter? The accumulation of assets throughout early adulthood can assist young adults and families weather hardships and maintain stability throughout adulthood. Life Course Theory argues that individual life circumstance intersects with larger social structures and institutions leading to long-term differing trajectories in critical life outcomes such as wealth status. These patterns can persist across the life span as young adults transition to mid-life and eventually older age. The highly debated U-shaped hypothesis suggests that, in a normative trajectory, wealth increases over the working adult years, and then declines as one reaches retirement with the expenditure of savings and lower levels of new savings. Undoubtedly, the life-cycle pattern between age and wealth presents differently across racial groups and reveals persistent patterns of wealth disparity that grows across the life course. A report by the Urban Institute finds that Whites, by their 30s, have 3.5 times the wealth of same-aged Blacks.

Wealth for most households but particularly for minority households is tied to home equity. Consequently, in our study, we investigate homeownership rates across racial groups including Whites, Blacks, Latinx, and Asians during the Great Recession. The results show that minority young adults are not on track to be homeowners in their early adulthood as their White counterparts. Black young adults had the lowest homeownership rates even when considering other factors such as education and income. The lower levels of combined non-housing and housing assets strain young Black families’ ability to weather economic hardships such as the Recession and maintain economic mobility. The picture is slightly different for young Latinos and Asians. We find that having parents with high socioeconomic status backgrounds can support Latino young adults achieve parity with Whites in asset and homeownership levels. Interestingly for Asians, the delay in purchasing a home may partially have to do with higher housing costs in regions of residence such as New York and California. Overwhelmingly, our results show that young White adults were the most financially secure and met the conditions for the successful attainment of early adulthood despite the looming economic crisis.

Racial disparity in homeownership is characteristic of the interrupted maintenance of adulthood and contributes to the wealth-race gap later in adulthood. It is also important to note that owning a home offers other benefits such as access to quality education, safe neighborhoods, equity to start a small business, and the ability to transfer wealth to the next generation. The long-term consequences of the 2007-2009 Great Recession may have exacerbated already existing homeownership disparities across racial groups due to the collective contribution of the drop in housing values from the real estate market collapse and the targeting of subprime mortgage lending by banking institutions of Black and Latino communities. 

Dr. Radha Modi is an Assistant Professor at the Department of Sociology. You can learn more about Dr. Modi here.