Generation X homeowners still hurting from housing crash, study says

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Generation X housebuyers are lagging behind those in other generations in gaining home equity and younger millennials are gaining on them, according to a new report by the real estate website Zillow released Monday.

The biannual report, which tracks the home equity of more than 50 million people, found that Gen Xers — now 35 to 50 years old — are still suffering from the effects of the housing crisis. After many of them purchased homes in the 2000s, they watched as the housing market crashed, with home values reaching new lows in 2012.

Zillow researchers found that while the average Generation X homeowner owes 70 percent of the value of his or her home to the bank, the average millennial is not far behind, owing 76 percent of home value although having had much less time to gain equity. 

Dowell Myers, a professor of urban planning and demography at the University of Southern California, said the crash hit Gen Xers the hardest. 

"That left them scarred. Their credit was damaged, they lost all their equity and they were psychologically risk-averse after that. Then they had to go through five years of recession and recovery when things were really lagging in the job market," Myers said. 

For those who weren't able to recover, their low home equity could have harsh consequences. Aaron Terrazas, the senior economist at Zillow, said the biggest source of retirement savings for most Americans is their home. 

"If you look at Americans around retirement age, anywhere from 50 to 60 percent of your total assets, your total net worth, is in your home," Terrazas said. "For low income, and particularly for Hispanic Americans, it tends to be much higher — as high as 80 percent. So building home equity is an important part of being able to retire comfortably."

Millennials have it easier, according to Myer. But their challenge is a thin housing supply, especially in the cities. That concerns Erica Feher, a millennial from West Los Angeles, who wants to buy a house with her husband, but has struggled.

"We have to make over an hour commute to be able to get into an area that we can afford," she said.

Some of her friends have given up on Los Angeles, Feher said.

"Quite frankly, I have a handful of friends who have moved back to my home state of Nebraska or other areas like Arizona and Texas where housing is just more affordable...", she said. 

In comparison to Gen Xers and millennials, baby boomers age 50 to 65 typically owe about 56 percent of their home's value, according to Zillow. The silent generation homeowners with a mortgage who are 65 and older typically owe 45 percent.

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