The dream of homeownership remains elusive for many young adults, with delays continuing to grow compared to previous generations. Not only is the homeownership rate lower among those under 35, but fewer young adults are becoming first-time buyers, and those who do are doing so later in life than ever before. Let’s dive into the data and uncover the reasons behind these trends.
Millennial Homebuyers: A Large Generation, But Delayed Homeownership
Millennials (currently aged 26 to 44 in 2023) are the largest generation in the U.S., numbering around 86 million. This surpasses both Generation X (60.7 million) and Baby Boomers (64.1 million). Despite their size, Millennials are facing significant hurdles when it comes to buying homes, with the median age for first-time buyers now at 38—older than any previous generation since the National Association of Realtors began tracking this data in 1981.
U.S. Population by Age in 2023
Chart idea: A bar graph illustrating the U.S. population by age group in 2023, showing Millennials as the largest group.
- First-time buyers’ median age: 38
- Repeat buyers’ median age: 61
Historically, first-time homebuyers were typically between the ages of 28 and 33. This shift represents a decade of missed housing wealth opportunities and may even mean skipping the “starter home” phase, with buyers opting for homes that meet long-term needs right from the start.
Median Age of Homebuyers, 1981-2024
Chart idea: A line graph showing the rising median age of homebuyers from 1981 to 2024.
- Notable upward trend in the median age for first-time buyers.
The Decline in First-Time Buyers
The percentage of first-time homebuyers has steadily decreased, with just 24% of homebuyers being first-timers in 2023—far below the historical average of 40% since 1981. A combination of factors has contributed to this trend, including limited housing inventory, rising mortgage interest rates, and increasing home prices across 90% of metro areas.
Challenges to Saving for a Down Payment
Many first-time buyers are facing challenges such as high rents, student loans, credit card debt, and car loans, making it even harder to save for a down payment. In fact, 49% of first-time buyers cited high rent as a significant barrier, while 40% pointed to student loan debt as an obstacle.
In an environment of high inflation, 63% of first-time buyers reported making financial sacrifices to afford a home.
Breakdown of Financial Hurdles for First-Time Buyers
Chart idea: A pie chart illustrating the various financial hurdles faced by first-time buyers.
- High Rent: 49%
- Student Loans: 40%
- Credit Card Debt: 36%
- Car Loans: 33%
The Impact of Student Loan Debt
Student loan debt has become a growing burden for young homebuyers, with nearly one-third of first-time buyers in 2023 carrying student loans. This challenge has been exacerbated by the resumption of federal student loan payments in October 2023, which has added to the financial strain on many young adults.
While child care costs also impact young buyers, they affect a smaller percentage—11%—compared to other expenses. In 2023, child care costs ranged from $20,000 to $28,000 annually per child, depending on age and care setting.
Homeownership Rates for Those Under 35
While there have been some improvements in homeownership rates for those under 35, the trend still falls short of previous generations. The rate peaked in 2022 but declined in 2023, with Millennials and Gen Zers yet to match the 39.7% homeownership rate of Baby Boomers and Gen Xers when they were under 35.
Homeownership Rate for Under-35s, 1982-2023
Chart idea: A bar graph showing the homeownership rate for individuals under 35 from 1982 to 2023.
- Baby Boomers/Gen X Average: 39.7%
- Millennials/Gen Z: Below 39.7%
Looking Ahead
Despite the challenges, there is a growing segment of young adults who are still managing to buy homes. In the upcoming analysis, we’ll dive deeper into this demographic, focusing on high-income, wealthy young buyers who are increasingly turning to all-cash purchases and large down payments. Stay tuned for more insights.
Ready to Take the Next Step Toward Homeownership?
If you’re under 35 and navigating these challenges, you’re not alone. At Investa, we understand the unique hurdles young buyers face, and we’re here to guide you through every step of the process. Whether you’re looking for your first home or exploring your options, our expert team is ready to assist.
Get started today by contacting INVESTA to connect with an experienced real estate agent who can help you find the right property and secure the financing that fits your needs. Let’s make your homeownership dream a reality!
