In March, the National Association of Realtors reported that the baby boomers had overtaken the millennials as the largest generation of homebuyers, accounting for 39% of all homes purchased in 2022, up from 29% the year before. Millennials had been the largest group of buyers since 2014. But when their parents’ generation dethroned them, their combined share fell from 43% in 2021 to 28% in 2022.
Gen Z, on the other hand, was on the move. The youngest adults doubled their share of the homebuying market from 2% to 4% — 30% of Gen Z buyers moved directly from a family member’s home to a home of their own.
But it’s hardly a fair contest.
Baby boomers have had decades to build savings, credit, equity and tax-advantaged retirement funds — plus they have the wisdom that comes with age and experience. The oldest Gen Zers, on the other hand, are just entering their mid-20s, and senior millennials are just hitting middle age.
In April, Redfin published data showing how the oldest members of the two youngest generations measured up against their parents in terms of age-based homebuying. It turns out that the old “when I was your age” lecture doesn’t always hold up.
- Gen Zers are ahead of their parents: In 2022, 30% of 25-year-olds owned their own homes. That’s more than the 27% of Gen Xers (born 1965-1980) who achieved homeownership by the same age. The study notes, however, that the high rate of young adult homeownership might be a bump and not a trend, as many Gen Zers seized the opportunity of historically low pandemic-era interest rates that those just behind them missed.
- Millennials fall a little short: Millennials, on the other hand, track behind their parents. In 2022, 62% of 40-year-olds owned a home compared to 69% of baby boomers when they hit the big four-oh decades ago.
The meaning of varied homeownership percentages at ages 25 and 40 across four generations is open to interpretation. But what is not up for debate is that each demographic faced its own unique challenges and enjoyed its own advantages.
Peter Evering is the business development manager for Utopia Management Inc., one of California’s largest property management companies. After more than two decades in the industry, he has valuable insight into the plights of both renters and buyers across all generations.
“Comparing millennials and Gen Z to baby boomers and Gen Xers when they were the same age, it is evident that the younger generations are facing challenges in terms of homeownership,” said Evering. “Today’s millennials, who are now the same age as the baby boomers were in the 1980s, are experiencing a significant delay in entering the real estate market. During the 1980s, the median age of first-time homebuyers was below 30 years old. However, as of 2022, the median age had risen to 36 years old, and this trend is expected to continue upwards.”
Older sets experienced serious economic turmoil and record inflation in the 1970s followed by absurdly high interest rates approaching 20% in the 1980s. But the 40-and-under crowd has suffered a steady erosion of purchasing power as incomes have failed to keep pace with the rising cost of education, homes and life in general over the last several decades.
“Younger generations are confronted with the reality of having to make do with less while facing higher costs,” said Evering. “The skyrocketing prices of housing, combined with stagnant wages and limited job opportunities, create significant obstacles for these cohorts. The cost of living has become increasingly burdensome, making it harder for them to save for a down payment and qualify for a mortgage. Additionally, the weight of student debt, exacerbated by the pandemic’s economic impact, further hampers their ability to enter the housing market.”
James Allen is a certified financial education instructor, financial advisor, certified public accountant and founder of Billpin.com. He’s seen how the previously mentioned challenges have affected the home-buying capacity of all generations — and he views the issue not from the perspective of economic obstacles, but of changing cultural norms, attitudes and goals.
“I’m going to take a contrarian view here and say that Gen Z and millennials are exactly where they should be in terms of homeownership, and it’s not necessarily a bad thing,” said Allen. “The traditional markers of success have shifted. Homeownership, once a staple of the American dream, is not the be-all and end-all it once was.”
That’s not to say Allen disagrees that the economic landscape has changed dramatically, and not for the better.
“Let’s face it, the cost of living has skyrocketed, student debt is at an all-time high and the pandemic has thrown a wrench into everyone’s plans,” he said. “Housing affordability? That’s a laughable concept in many of our cities today.
“But here’s the thing, Gen Z and millennials are adapting. They’re prioritizing experiences over possessions, mobility over stability. They’re exploring the world, starting businesses and creating lives that don’t necessarily include a white picket fence. So, are they behind in homeownership? By traditional standards, yes. But maybe the question we should be asking is whether those traditional standards are still relevant.”
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