Homeownership rates stagnate for young people
Rates of homeownership stalled out for Generation Z and millennials in 2024. A Redfin report released Monday showed that ownership hovered around 26% for older Gen Zers and 55% for millennials, instead of increasing like they did for Generation X members and baby boomers last year.
While the younger half of the population made gains in homeownership during the pandemic, that momentum has flatlined.
Tyler Klene, a 33-year-old from Denver, started his search a year ago, first with standalone houses.
“Even something that was like a single-bedroom, little bitty thing, I couldn’t afford that anywhere that I wanted to live,” said Klene.
So he expanded his search to townhomes and condos that seemed to fit his $300,000 budget. But with homeowners association and other fees, “that just made them out of reach,” said Klene.
After a year, he’s mostly given up.
“These high interest rates, the low amount of inventory, it’s creating this barrier where it’s harder for young people to advance in terms of homeownership,” said Daryl Fairweather, chief economist of Redfin.
Fairweather said those elevated interest rates are making it even harder for first-time buyers. “They are borrowing most of the money to purchase the home,” she said.
Uncertainty around interest rates is discouraging buyers, said John Paasonen, CEO at mortgage services firm Maxwell.
“What we saw across all segments, but particularly millennials, just the pumping on the brakes to say, ‘What’s going to happen?’” said Paasonen.
Younger people are waiting and seeing as they continue to trail their parents’ generation in terms of homeownership, which can be an important financial milestone.
“Homeowners have about 40 times, you know, the wealth of renters,” said Daniel McCue, senior research associate at Harvard University’s Joint Center for Housing Studies.
But Mauricio Soto, a real estate agent in Oregon, is optimistic that young people will figure it out — they have well-paying jobs and time on their side.
“If millennials, Gen Z, they understand and they know how important it is to save money for the future, definitely they will be in a really, really good position.”
He said young people should start saving and earning interest as early as they can to prepare for homeownership.
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