Young Adults Have Fewer Homes, Fewer Cars, and Less Debt
Young adults are carrying less debt than before the start of the 2008 recession, primarily because they own fewer major assets.
A new analysis from the Pew Research Center released February 21 shows Americans under the age of 35 are putting off high-dollar purchases like automobiles and houses.
The median debt of households led by an adult under 35 fell by 29 percent from 2007 to 2010. For households led by adults 35 and older, the decline was 8 percent.
Lowest Level in 30 Years
The share of younger households with debt of any kind dropped to 78 percent, the lowest level since the government began collecting this data 30 years ago. The share of young adults with credit card debt dropped to 39 percent in 2010 from 48 percent in 2007.
While overall debt declined, debt from student loans was the only major type of debt to increase. Student debt accounted for 15 percent of the total debt for young adults in 2010, up from 9 percent in 2007. Forty percent of young households had student loan debt in 2010 compared to 34 percent in 2007. Surprisingly, the median amount owed by households with student debt fell from $14,102 in 2007 to $13,410 in 2010.
The study also showed:
- 34 percent of younger households owned their primary residence in 2011, down from 40 percent in 2007. The median outstanding amount of residential property debt owed dropped from $150,000 in 2007, to $128,000 in 2010.
- In 2007, 73 percent of households headed by an adult younger than 25 owned or leased at least one vehicle. This dropped to 66 percent in 2011. In 2010, 32 percent of younger households had vehicle debt, down from 44 percent in 2007. The typical outstanding amounts owed on an auto dropped from $13,000 in 2007 to $10,000 in 2010.
- The median outstanding credit card balance dropped to $1,700 in 2010 from $2,500 in 2001 and $2,100 in 2007.
- The debt-to-income ratio of younger adult households more than doubled from 1983 to 2007, when it peaked at 1.63. It fell back to 1.46 in 2010.
Pew used the Federal Reserve Board's Survey of Consumer Finances for its analysis of household debt, and 2010 is the most recent year available. Home ownership tallies are based on the American Community Survey. Vehicle ownership numbers rely on the Consumer Expenditure Survey.
Bill Hardekopf (email@example.com) is CEO of LowCards.com. Used with permission of LowCards.com.
“Young Adults After the Recession,” Pew Research: http://www.pewsocialtrends.org/2013/02/21/young-adults-after-the-recession-fewer-homes-fewer-cars-less-debt/