"Young Americans Losing Hope in Homeownership: Affordability Crisis Hits Millennials and Gen Z"

Photo byStephen Brashear

A growing number of young Americans are losing hope in the dream of homeownership, with affordability issues and soaring mortgage rates as the primary obstacles. According to a recent report by Redfin, 18% of millennials and 12% of Gen Z respondents believe they may never own a home. The survey, conducted by Qualtrics between May and June, captured insights from over 5,000 U.S. residents, including renters, recent movers, and those planning to move in the near future.

The Affordability Barrier

The biggest roadblock for both millennials and Gen Z? Affordability. Home prices remain steep across much of the U.S., and mortgage rates have doubled since pandemic lows, hitting their highest levels in over two decades. This has left many young Americans feeling priced out of the housing market, even as rental costs rise. Roughly a third of millennials and Gen Zers surveyed pointed to unaffordable mortgage rates as a significant deterrent to buying a home.

According to Redfin’s Chief Economist, Daryl Fairweather, many young people don’t even have the option to choose between buying and renting. “They’re renting because, despite the increase in rent payments, it’s still more affordable than buying a home in much of the country,” Fairweather noted. “Renters also don’t need to save for a down payment, which is a major hurdle for potential buyers.”

Creative Financial Strategies

With the mounting challenge of buying a home, many young Americans are turning to alternative financial strategies. According to the survey, 40% of millennials and Gen Zers planning to purchase a home soon are working side gigs to save for a down payment. Additionally, 23% of respondents anticipate relying on cash gifts from family to make homeownership a reality.

The survey also revealed that 21% of Gen Z and 16% of millennials said paying off student loan debt is a critical step they need to complete before buying a home. Some are even considering selling investments to help cover the down payment—20% plan to sell stocks, while 15% of both generations said they would sell cryptocurrency.

Rising Prices, Waning Opportunities

The housing market remains competitive, especially in cities like Seattle, where the median sale price in July stood at $800,000—a 7% drop from the previous year but still a considerable sum. Meanwhile, condos in the area sold for a median price of $502,000. Despite these high prices, younger generations are not benefiting from the rise in equity, which has historically helped older homeowners accumulate wealth.

“The worsening housing affordability crisis has an outsized impact on Gen Zers and millennials because they’re much less likely to own a home than older generations,” Fairweather stated. “Instead of gaining equity and profiting from rising home prices, they bear the burden of high costs, high down payments, and steep monthly mortgage payments."

For many young Americans, the dream of owning a home has become an elusive goal, hindered by economic forces that continue to favor wealthier, established homeowners. Unless the market shifts dramatically, a significant portion of Gen Z and millennials may find themselves permanently priced out of homeownership.