Many millennials and Gen Z don't see home ownership in their future, Redfin survey finds
Concerns over housing affordability are adding up to serious doubts for many millennials and Gen Z about whether they'll ever own their own home.
"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,” Redfin Chief Economist Daryl Fairweather said in a statement. “That means many young Americans don’t benefit from rising home prices by gaining equity."
"Many young people don’t have a choice between renting and buying. They’re renting their home because even though rent payments have increased, too, it’s still more affordable than buying in much of the country–and renters don’t need a down payment.”
According to a recent survey by the Seattle-based online real estate giant, about 1 in 5 millennials doubt they will ever own a home. Among Gen Z, about 1 in 10 feel owning a home is not in their future. The high costs of homes, and concerns over affordability, were cited as primary reasons for this feeling. Lack of ability to save for a down payment was also frequently mentioned. In fact, Redfin also found that 40% of these two generations were working second jobs with the hope of saving for a down payment.
Redfin's survey was conducted in May and June 2023 and included more than 5,000 people who recently moved, were about to move, or rent their home in the United States. Among this group, 1,340 were Gen Z, and 1,973 were millennials.
Gen Z was classified by ages 18-26, and millennials are ages 27-42.
The sentiment among the younger generations contrasts with Gen X and baby boomers. A 2022 Bank of America Institute survey found that 60% of Gen X, and 76% of baby boomers plan to retire in a home they own. Another 27% of Gen Z said they will sell and move into a new home upon retirement; 13% of baby boomers said the same.
Bank of America also concluded that affordability appears to be a big motivating factor these days. Another assessment found that America's "Sun Belt" has been attracting many homebuyers in recent years, largely because of the more affordable home prices when compared to the West and Northeast.
Redfin's survey comes about a month after another report stating that a person should earn $142,000 annually just to afford a "starter" home in Seattle. Redfin's data indicated that a Seattle starter home cost around $535,000, with a median mortgage payment of $3,545.
Nationally, Redfin concluded that a person should earn $64,000 to afford a starter home (up 13% from a year prior). At the time, this type of home cost $243,000, which was up from $166,500 in June 2019.
“The most affordable homes for sale are no longer affordable to people with lower budgets due to the combination of rising prices and rising rates," Redfin Senior Economist Sheharyar Bokhari said in early August. "That’s locking many Americans out of the housing market altogether, preventing them from building equity and ultimately building lasting wealth."