Young Adults: Fewer Homes, Fewer Cars, Less Debt
February 27, 2013
The Great Recession caused everyone to tighten their belts, none more so than young adults who now have fewer homes, fewer cars and less debt. The debt profile transition of younger adults reflects a broader societal shift toward delayed marriage and household formation, says the Pew Research Center.
- From 2007 to 2010, adults younger than age 35 lowered their median household debt by 29 percent compared with just an 8 percent decline in households headed by adults age 35 and older.
- Young adults are also less likely to carry credit card debt, down 11 percent from 2007 to just 39 percent in 2010.
- Although they have less credit card and median household debt, young adults are now more likely to carry student loan debt after the recession, rising 4 percent in 2007 to 40 percent in 2010.
The data, from the Federal Reserve Board and other government data, suggests the young adult demographic is no longer running up record debt-to-income ratios as they did during the bubble economy of the 2000s.
- The share of young adults who owned their primary residence fell from 40 percent in 2007 to 34 percent in 2011, which was accompanied by 3 percent fewer households securing debt with residential property and the median outstanding amount of residential property debt owed falling from about $150,000 in 2007 to $128,000 in 2010.
- By 2011, 66 percent of young households headed by an adult younger than age 25 had owned or leased at least one vehicle, down 7 percent from 2007.
- The median outstanding amount owed by younger households declined from $2,500 in 2001 to $2,100 in 2007 to $1,700 in 2010.
- Younger households have also reversed a long standing trend of increasing debt-to-income ratios, dropping their ratio to 1.46, down 0.17 from 2007 but still higher than adults age 35 and older.
The results of the report indicate that younger households are more likely to be headed by a college-educated adult but less likely to acquire homes, instead opting to rent.
Source: Richard Fry, "Young Adults After the Recession: Fewer Homes, Fewer Cars and Less Debt," Pew Research Center, February 21, 2013.
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