Will millennials buy a house in the suburbs like their parents and grandparents? What's it say about the economy if they don't?
Will millennials buy a house in the suburbs like their parents and grandparents? What's it say about the economy if they don't? - 

We talk a lot about home ownership on our shows, along with housing starts and average home costs. All those real estate stats double as as economic indicators and a kind of goal post for prosperity in America.

The rate is measured as the percentage of homes in the country owned by their occupants, and it's hovering around a 50-year low at 63.7 percent last quarter, according to the U.S. Census Bureau. That's set off alarm bells among some economists who worry millennials will be stuck renting forever. But how much does that really matter? Make Me Smart listener Annie Brinich wanted to know. 

"It baffles me that young people not buying houses is such a grave concern," Brinich wrote us on Facebook. "Does our nation's economy hinge on home ownership? Can anyone tell me why young people choosing to rent rather than own is news?"

Since Kai Ryssdal and Molly Wood have the week off, we decided this was a good time to get some answers. We called up Stephen Conroy, economics professor and associate dean at the University of San Diego School of Business. Homes hold a unique place in Americans' financial lives, he said.

"If we look at household wealth, the largest component of it is going to be household equity. So that's an important asset," he said. "Its rise or fall frankly can have a huge impact on household wealth."

In that way, home ownership is a handy stand-in for a lot of other economic indicators. Think of all the stuff you need to get in the housing market: A well-paying job, cash for a down payment, good credit to secure a mortgage and stability to stick around for at least a few years and make the whole process worth it. You also need to have affordable housing available to you.

It's probably too early to be worried about millennials' real estate, Conroy said. The Census Bureau, which reports the home ownership rate, defines millennials as Americans born between 1982 and 2000. That's still on the young side for a homeowner.

"Ten years from now, if we're still saying the same thing, then I would be concerned. Because now we would be talking about 27- to 45-year-olds who really should be in the peak of their homeownership years."

But what if they're not? After all, one can have good credit, a stable job and a healthy savings account and choose not to get a mortgage. It's correlation, not causation. As Brinich points out, is that really such a big problem for the economy?

Millennials have reasons to be gun-shy, Conroy said. They're saddled with rising student debt, and they witnessed the housing bust first hand. As they've entered the workforce, young adults have so far seemed to value renting's flexibility and staying in cities, close to work.

"If they in the end decide to adopt this new lifestyle, and are not fleeing to the suburbs as their parents or grandparents did ... then we might actually see this change," Conroy said of homeownership rates. "It may not on its face be a negative indicator as long as this is the case, namely that households are investing much more in securities like stocks and bonds."

Conroy said he'd still recommend young people look to buy. For decades, tax benefits for homeowners have been a bipartisan effort and they make houses a unique investment. You can't sleep in your stocks and bonds, and you don't get the same kind of tax breaks from them either.

"A house is a place to put your stuff, but it's also a place where you lay down your head at night," he said. "It's an investment without people really thinking of it as an investment."

Follow Tony Wagner at @tonydwagner