Why Gen Z and millennials aren’t prioritizing homeownership

By Jenesy Gabrielle Burkett Fox

At 72 million people, millennials are the most populous generation with the oldest of them in their late 30s. Yet, only 47.9% of millennials own a home. This shows a steady decline in homeownership compared to 69% of Generation X owning homes and 77.8% of baby boomers. This trend is only projected to continue with Generation Z, born after 1997.

For younger generations, the American dream is changing. Rather than staying in one job for the length of their career and settling down in the suburbs, many young people are choosing to job hop or take remote positions to allow them mobility and freedom.

Homeownership does not hold the same stability for people it once did. Hannah, a 36-year-old single woman living in Portland, Oregon, said, “Financially, (homeownership) doesn't make sense and doesn't feel attainable.”

Rather than prioritizing homeownership, Hannah prioritizes travel and setting herself up for what she views as stability.

“I prioritize investing and saving enough to have choices down the road. Travel is a huge priority for me, so my short-term goals all revolve around seeing as much of the world as I can. Stability means the freedom to have choice,” she said. “Owning a home would make me feel more tied down in what I can and can't do”.

There are some obvious financial indicators that tell us why Gen Z and millennials are owning homes at lower rates than previous generations. In 2021, the median price of rent in the U.S. was $1,840. This is in contrast to the median mortgage payment in 2021 in the U.S. at $1,672 for a 15-year fixed mortgage. When buying a house, monthly mortgage payments are only the beginning when it comes to expenses to consider. Homeowners are also responsible for property tax, homeowners association fees and, of course, regular upkeep associated with owning a home. As a renter, it is a benefit that these fees, appliances, and upkeep of the home are the responsibility of the landlord.

Steph, age 29, said that homeownership doesn’t feel attainable to her and she instead prioritizes paying her debt.

“With cost of living constantly climbing and my wages being stagnant, I’ve had to rely on credit cards to scrape by. It’s caused me to get into significant debt,” she said. “Every paycheck I end up with about $100 left to buy food, gasoline, home goods, etc. I can never save enough for a down payment, my credit has tanked and my annual income is too low; so I know I’ll never be approved for a mortgage.”

More than previous generations, millennials and Gen Z have to look at the total price of owning a home in relation to their income. You may think, “Well, sure, but all generations have had to do that.” And you’d be right, with the primary difference being wages. While the price of owning a home has increased by 18.7% from 2021 to 2022, wages have only increased 5.1% in the same timeframe.

Eryn, a 24-year-old single mom, explains that homeownership “doesn’t feel attainable” because she works a minimum wage job and can barely afford her necessary expenses including rent, car payments and diapers.

Daniela, age 28, also doesn’t prioritize buying a home.

“The future is uncertain so I’m prioritizing experiences now over something that may not happen, like a house,” she said. Basic necessities as well as enjoyable expenses like “clothes, decor for my apartment, and music events, and going out to eat and drink with my friends” take priority over the uncertainty of homeownership.

This does not mean that homeownership isn’t attainable for Gen Z and millennials. But with the state of the housing market these generations came of age in and the job market they are contending with currently, homeownership doesn’t hold the same sense of stability it has for previous generations.

For Rachel, a 35-year-old mother of two, providing for her kids takes precedence over owning a home. For her, stability is “Not having to look at my bank account to decide if we can do what we want or get what we need. Like just having enough to get the brand of granola bars my kids like instead of having to get the store brand or choose between that and another snack,” she said. It’s about “Not always trying to budget our way out of not quite having enough.”

For those that do prioritize owning a home, it can still feel out of reach. Hannah, age 26, who lives in Oregon with her husband and two cats explains, “I would say that I prioritize a basic standard of living over owning a home. Homeownership isn’t a guarantee, so it’s most important to me to feel like I'm still living comfortably while saving for a home.”

Hanin, 23, holds homeownership as a priority eventually.

“I would rather do it later in life and spend my money traveling and investing in other things than tying all my money up in one big thing that might depreciate in value,” she said.

More and more young people are seeing a system that they can’t climb up, making the goals of their parents and grandparents less relevant. Without serious reform to both the housing and job markets, generational trends show that homeownership will only become less attainable.