Why Young Homeowners Say They’re Better Off Than They Were 4 Years Ago, but Renters Don’t
Written by
Adam Palasciano
Edited by
Amber Barkley
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Buying a home these days is very expensive. The COVID-19 pandemic spurred record inflation and unprecedented demand for housing, which drove up home prices nationwide and has resulted in mortgage rates not seen in decades. Today, young homeowners and young renters are feeling differently.
The Economic Divide
As per a recent Redfin survey, the sentiment among young millennial and Gen Z homeowners is that they’re much better off than renters of the same age. Here are some important stats that the survey revealed:
- Of millennial and Gen Z homeowners, 69% said they’re better off than they were four years ago, compared with just 52% of millennial and Gen Z renters.
- While 26% of millennial and Gen Z renters said they’re worse off now, just 18% of millennial and Gen Z homeowners said the same.
- The gap between homeowners and renters in younger generations is now much larger than the gap in older generations.
Chen Zhao, Redfin economics research lead, said, “Economic inequality is on the rise between young people who have been able to break into homeownership and young people who haven’t.”
Rents nationwide are about 20% higher today compared to before the pandemic. Zhao explained that while there was a small window during the pandemic when mortgage rates were very low, not all millennials and Gen Zers were in the financial position to buy a home, and not everyone could take advantage.
Housing Affordability Is Still a Nationwide Issue
Housing affordability in the U.S. has worsened dramatically. Mortgage rates are still more than double their pandemic lows and home prices are near record highs despite cooling inflation, which currently hovers around 2.4%, according to the U.S. Bureau of Labor Statistics.
At the same time, The Federal Reserve Bank of St. Louis reported that the 30-year fixed rate mortgage average in the U.S. was 6.72% as of Oct. 31, 2024. Combined with stubbornly high mortgage rates and the current U.S. median home sale price of $427,989, many young Americans are still being priced out of homeownership — and the wealth gains that come with it.
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