Many From Younger Generations Don’t Expect to Become Homeowners, Redfin Reports
Many From Younger Generations Don’t Expect to Become Homeowners, Redfin Reports
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Many millennials and Gen Zers believe that they’ll never be able to buy a home, according to a new Redfin survey.
KEY TAKEAWAYS
- Nearly one in five young renters think they will never be able to own a home.
- Many cited a lack of affordability and high home prices as their largest barrier.
- Down payments and rising mortgage interest rates are a major stumbling block.
Of the 5,079 renters surveyed, 18% of millennials and 12% of Gen Zers said they don’t think they’ll ever own a home. Most of those who don’t believe they will ever own cited a lack of affordability as the reason, with about half saying high home prices are keeping them from buying.
Nationally, median existing home prices reached $406,700 in July, a 1.9% increase from last year, according to the National Association of Realtors.
“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,” Daryl Fairweather, Redfin chief economist, said in the report.
“That means many young Americans don’t benefit from rising home prices by gaining equity,” she added. “Instead, these would-be first-time homebuyers bear the burden of high prices, high down payments, and high monthly mortgage payments, without profits from a previous home to offset the cost.”
Saving for a down payment is a major homeownership barrier for Gen Z and millennials. Of those planning to buy a home in the next year, about 40% of both generations are working second jobs to save for a down payment, and about one-quarter plan to use cash gifts from family members.
More than 20% of Gen Zers and millennials plan to sell stock and 15% plan to sell cryptocurrency to fund their down payments. Many in both generations said they needed to pay off student loan debt before they could afford to buy a home.
About one-third of Gen Z and millennials said they can’t afford monthly mortgage payments, and more than 30% said mortgage rates are too high. The average interest rate on a 30-year, fixed-rate loan was 7.18% as of the end of August, up from 5.55% a year ago and 2.87% over the same period in 2021, according to Freddie Mac.
Gen Z made up 4% of homebuyers in 2022, according to the NAR’s latest Home Buyers and Sellers Generational Trends report, while millennials accounted for 28%.
BY Erica Sweeney
Source: https://www.investopedia.com
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