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The Home Equity Problem for Generation X

There is a disparity with home equity between Gen Xers and millennials, according to a recent report released by Zillow—which says that millennials and Gen Xers have similar median loan to value ratios on their mortgage.

And the reason for this similarity, they say? The timing each generation got into the housing market in relation to the housing bust in the mid 2000s. Many Gen Xers were just beginning to purchase their homes in the years or months preceding the housing crash, which means they were hit the hardest when prices plummeted. Zillow estimates that homes lost 22.9 percent of their value on average between April 2007 and December 2011. Other generations that had been in the housing market for longer, like the Baby Boomers and the Silent generation, had built up enough equity in their home to sustain the crash.

Most millennials (64.2 percent) have entered the housing market in the past five years, which means they weren’t around when the market crashed, and subsequently entered as home prices were rising. If Gen Xers bought their house before the crash, and lost a good percentage of their equity, they would be just getting back to their original prices as millennials entered.

Certain metros were hit harder than others in the crash. For example, Las Vegas home values fell 62 percent between peak and trough, meaning that many millennials have more equity than their Gen X brethren. Similarly, median LTV ratio for millennials is far more favorable than it is to Gen Xers.

In terms of high equity, the Silent Generation is the generation with the highest number of LTVs under 10, (11.8 percent), followed by Baby Boomers (6.1 percent). Gen X is further behind at 1.3 percent, and millennials are close at 0.3 percent.

Zillow’s data shows that only 36.7 percent of all homeowners have a LTV of 0.

About Author: Joey Pizzolato

Joey Pizzolato is the Online Editor of DS News and MReport. He is a graduate of Spalding University, where he holds a holds an MFA in Writing as well as DePaul University, where he received a B.A. in English. His fiction and nonfiction have been published in a variety of print and online journals and magazines. To contact Pizzolato, email joseph.pizzolato@thefivestar.com.
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