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  • Alexander Wissel

Which Generation Is Struggling to Buy a Home Right Now?

Hint: it's the Millennials

  • Gen Z faces financial obstacles and rising housing costs, but their homeownership rate is surpassing that of Gen X.

  • Millennials struggle with student loan debt and stagnant wages, but their recent surge in home purchases shows determination.

  • Generation X grapples with multiple financial responsibilities, while Baby Boomers navigate downsizing with accumulated equity.

Which Generation Is Struggling to Buy a Home - Source NAR
Shares of Buyers and Sellers by Generation

In the ever-evolving landscape of the real estate market, each generation faces unique challenges when it comes to buying a home. Home ownership is a foundation of financial security and it’s importance cannot by underestimated. It impacts the long-term prosperity and the generational wealth it creates for families.

It’s why we are passionate about helping people buy and sell homes – the effects are profound and life-changing.

The National Association of Realtors® annual study: The 2023 Home Buyers and Sellers Generational Trends Report, examines the similarities and differences of recent home buyers and sellers across multiple generations. It gives us a unique insight into the trends of who is buying… and how much.

So who is struggling the most in our current home market? Let's delve into the specific challenges faced by each generation and gain a better understanding of the situation.

Which generation is struggling to buy a home right now?

Based on the information provided in the article and the National Association of Realtors® annual study, it can be concluded that Millennials are currently facing the most significant challenges in buying a home. Factors such as student loan debt, stagnant wages, and rising rental costs make it difficult for them to save for a down payment and qualify for mortgages.

Gen Z: Overcoming Entry Barriers

Gen Z, born between the late 1990s and early 2010s, is the newest generation entering the housing market. Many Gen Z individuals are still in the early stages of their careers or pursuing higher education. It can limit their financial resources for purchasing a home.

Student loan debt, similar to Millennials, can also impact their ability to save for a down payment. Additionally, Gen Z faces the pressure of rising housing costs in certain areas, making it difficult to enter the market.

However, there is good news for the youngest generation. Gen Z is beating their Gen X’s home homeownership rate – 30% of 25-year-olds own their home, vs only 27% of Gen X at the same age.

The Gen Z’s who took advantage of lower rates – despite buying smaller homes – will be better positioned financially than their peers. The average mortgage rate for homebuyers who bought under the age of 25 in 2021 is a stunning 3.1%.

Millennials: The Homeownership Hurdle

Millennials, born between 1981 and 1996, often find themselves grappling with various obstacles on their path to homeownership. Factors such as high student loan debt, stagnant wages, and rising rental costs make it challenging for this generation to save for a down payment.

Similar to Gen Z, qualifying for a mortgage today is a challenge for many Millennials. As a group Millennials were slow to enter the home market, 10 years ago the numbers pointed to an alarming rend that they were not buying. But they have rushed to catch up – Millennials have bought almost 60% of all homes sold over the past few years.

It’s worth noting that they are still getting some help from their families. Almost 22% of Younger Millennials received a gift or loan from someone to help with their downpayment.

Many Millennials who bought earlier before rates jumped – tagged as a group called Mortgage Millennials – are like their Gen Z counterparts and will be well placed for future financial security vs their peers who are now contending with higher rates and higher prices.

Generation X: Caught Between Priorities

Generation X, born between 1965 and 1980, faces a unique set of circumstances when it comes to homeownership. Many individuals from this generation are juggling multiple financial responsibilities, including supporting both their children and aging parents.

This financial strain, coupled with the lingering effects of the 2008 financial crisis, makes it difficult for Generation X to allocate sufficient funds towards purchasing a home.

There is some good news for Gen X’s, as a group they bought the most amount of homes (24%) last year. The median age of the group was 50.

Baby Boomers: Transitioning Towards Downsizing

Baby Boomers, born between 1946 and 1964, find themselves in a different position compared to younger generations. Many Baby Boomers are looking to downsize and transition into smaller homes. While some may struggle to sell their current homes due to limited demand or declining property values in certain areas.

Most Baby Boomers are in an enviable position vs younger generations – with greater equity and cash reserves to use for purchases. As Dr. Jessica Lautz, NAR deputy chief economist and vice president of research, explains: "Baby boomers have the upper hand in the homebuying market. The majority of them are repeat buyers who have housing equity to propel them into their dream home – be it a place to enjoy retirement or a home near friends and family.”

Younger Baby Boomers bought the second most amount of homes (23%) last year, they sold almost 30% of all houses as well.

Which Generation Is Struggling to Buy a Home - Source NAR
Age of Home Buyers

Mortgage Interest Rates Matter

Mortgage rates started climbing last year, but the increases gained steam as the Federal Reserve tightened spending and raised the Fed Funds rate. The spike in mortgage prices locked some buyers out of previously affordable price points.

To put it in more specific terms, the average price of a home is roughly $436,000. Thats a jump of almost 32% from 2020 when the median home price was $329,000.

Consider that today you would need to earn over $160,000 annually to qualify for a $450,000 mortgage. You couldn’t afford that even in a double income household with each making the average U.S. salary of $61,900.

You start to see the issues facing younger generations. If they are first time homebuyers without equity from a previous home, or can’t get financial help from their parents for a down payment, they are going to struggle to qualify for a mortgage and compete in the market.

Which Generation Is Struggling to Buy a Home?

The current state of the housing market poses unique challenges for each generation striving to achieve homeownership.

Gen Z faces financial hurdles and rising housing costs, but there is hope as they surpass Gen X in homeownership rates. Millennials have dealt with student loan debt and stagnant wages, but their recent surge in home purchases shows determination.

Generation X struggles with multiple financial responsibilities, while Baby Boomers navigate downsizing with their accumulated equity.

The spike in mortgage interest rates further impacts affordability, making it difficult for younger generations to qualify for loans. As housing prices continue to rise, it is evident that the path to homeownership remains a formidable journey for many, requiring strategic financial planning and support.

Taken as a whole, it’s hard to define which generation is worse off. Based off the information in the National Association of Realtors® annual study we can say Millennials are having the hardest time buying a home. First time buyers as percent of the market were 34% in 2022, but only 26% last year.

As an real estate agent and Realtor, I see this in our market and agree with that conclusion. However it’s more than just one group being hurt. I believe that the individuals who have been hardest hit economically are those who struggled and didn’t buy in the last few years, preferring to rent instead. Specifically younger Millennials and Gen Z’s.

They probably thought the market would stabilize and prices would recede like they did through 2007-2012. They haven’t, and the price this group has paid is potentially being locked out of homeownership until rates improve or the market falls.

Until those things happen – which doesn’t look likely anytime soon based on the current market – these potential buyers will be forced to sit on the sidelines. The limited inventory and competition from investors will continue to exacerbate the problem.


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