By the age of 40, only 43% of Millennials have acquired homeownership, compared to 52% of Baby Boomers at the same age, according to Redfin. Additionally, the median age for first-time homebuyers has now reached 38, setting a new record high.
A key factor contributing to this delay in homeownership is that Millennials experienced two major economic crises—the 2008 housing market collapse and the 2020 COVID-19 pandemic—both of which have led to a more cautious approach to real estate investments.
In the wake of rapidly escalating home prices, many Millennials view homeownership as a risky financial undertaking that requires careful and strategic planning.
While some Millennials perceive homeownership as a financial burden or an unnecessary risk, others are still actively investing in real estate, albeit with more cautious expectations regarding future appreciation compared to older generations.
According to a recent survey by Santander, nearly 50% of Millennials and Gen Z respondents consider homeownership a more significant challenge than it is often portrayed, a stark contrast to the 27% of Gen Xers and Baby Boomers who share the same sentiment.
The current housing market environment undermines the traditional view of homeownership as a means of building wealth. With property prices remaining high, purchasing a home in today’s market has become increasingly difficult, keeping many potential buyers, particularly within these younger generations, on the sidelines.
The inability of Millennials to enter the housing market exacerbates wealth inequality and undermines their long-term financial security, as homeownership is a critical wealth-building tool. An illustrative example is that those who purchased homes during the pandemic were shielded from the escalating costs of rent, which, according to the latest Federal Reserve data, has risen by more than 25% since January 2020.
This widening wealth gap has broader implications for the economic well-being and social cohesion of Millennials. The International Monetary Fund (IMF) has noted that increased inequality fuels political polarization and impedes economic growth, highlighting the long-term societal consequences of this trend.
