Will millennials ever be able to buy a house?

Updated June 27, 2024

The millennial generation is the largest part of the population in the United States. This means those born between 1981 and 1996 make up the greater portion of aspiring property buyers. Unfortunately, homeownership issues such as expensive housing costs, burdensome home loan debts, and tighter lending standards are standing in their way.

So, will millennials ever be able to buy a house? A quick answer to that is yes. However, it still depends on a lot of factors. The next question is: how can it be done? To give a solution to this issue, Mortgage Professional will discuss what you should know about millennials and their obstacles with homeownership.

For mortgage agents with clients who are millennials, this will serve as a great educational piece for them. Share this article to help them understand the difficulties that their generation faces when it comes to buying a property and what to do about these issues.

Can millennials still buy property in the US?

If you are a millennial, your dream of buying a house is not light years away from reach. Many people in your generation can still purchase a house. Both the housing market and millennial demand remain red hot, according to recent data from Bank of America, one of the top US banks. As such, a lot of millennials are likely to purchase property in the coming years.

The top reason for this trend is an improvement in financial position. This is consistent with strong household balance sheets and increasing wages in the US. Millennials are also the fastest growing demographic in terms of homebuyers. This is mainly because they represent the larger part of the population in the country.

What is the average age of millennials buying a house?

The average age of millennials who become first time homeowners is around 35 years old, according to the National Association of Realtors (NAR). Most of the people who were buying properties are married couples. They make up about 59% of the total figure.

The second biggest group was single women. They comprised 19% of the property buyers in entirety. Following that, about 10% were single men. Completing the list were unmarried couples who made home purchases together. This group make up 9% of the recent buyers, just 1% less than the single men.

The report also found that the percentage of married couples making purchases is the lowest it has been in over a decade. This means that despite getting the largest bulk, married couples are making up a smaller share of recent buyers compared to the past years.

It is worth noting that 89% of those who bought a home did so by working with a real estate agent or mortgage broker. Only 6% of property buyers bought directly from former homeowners.

Millennials and their attitude to homebuying

Millennials’ attitude to homebuying is simple: they want to own homes someday but are feeling priced out. Some of the obstacles to homeownership for the millennial generation are:

• expensive home prices
• lack of savings for downpayment
• high mortgage interest rates
• common debts like credit card and car loans

Buying a house: a sign of financial success for millennials

YouGov conducted a Bankrate survey which found that among millennials, 31% said homeownership is the top sign of financial success. On the other hand, 32% of Generation Z (anyone born from 1997 onward) thinks the same.

For most millennials, rising property prices are the main cause of their inability to afford a home. Generation Z, by comparison, said their income is not yet high enough. Overall, the survey found that 29% of Americans view homeownership as the most important sign of success.

Not all millennials can buy a house

There are other millennials who might want to purchase a house but are unable to do so. A survey conducted by mortgage financing company Fannie Mae found that more than half of millennials feel that homeownership is financially out of reach. Contributing elements include:

• expensive housing costs
• mortgage fees
• low credit scores
• personal financial problems

At the top of the list is expensive housing costs. The existing median home price rose to over $420,800, which is an all-time high. For comparison, it was only $119,600 in 2000. Skyrocketing property prices are due to several reasons such as:

• inflation
• housing shortages
• high interest rates
• rising fees for building materials

How many millennials don't own a house?

There are 72.7 million millennials in the US and less than half of them are not homeowners. This might be by choice, or they found it unattainable at present. In connection with this, the housing affordability crisis in the US has increased over the past years.

Property prices shot upward at record rates due in part to rising demand since the beginning of the COVID-19 pandemic. While the red-hot housing market is showing signs of cooling, homeownership remains a distant goal for some millennials in the US.

It is harder for millennials to buy a house nowadays

Will millennials ever be able to buy a house? While buying a house for millennials is not impossible, it is still more difficult for some. One major cause of this is tighter lending standards. Restrictive compliance has been preventing millennials from entering the housing market.

The standard for lending has also tightened significantly since the 2007-2009 recession. Another factor that makes it harder for millennials to become homeowners is the decline in mortgage credit availability.

Financial debt makes homeownership difficult for millennials

It is common for millennials to carry high levels of financial debt. Despite having a job, they need to prioritize paying these debts before saving for future goals and capital for mortgage applications. Millennials who struggle with debt find it harder to purchase their first property.

Watch this video on why buying a house in the US is so hard right now—not only for millennials:

Whether you are a millennial or not, it is beneficial to work with a good mortgage broker and partner with top performing lenders. Find the right mortgage professionals for you on our Best in Mortgage page.

Buying a house for millennials is challenging but possible

Based on the current housing market and economic pattern, it is challenging for many millennials to become first time homeowners in a snap. Nevertheless, homeownership can still be possible because of these key considerations:

1. historically low interest rates
2. income growth
3. increased work flexibility
4. first time homebuyer programs
5. improved saving habits
6. growing household formation
7. other financing options

Let’s take a closer look at each one of them:

1. Historically low interest rates

While interest rates have climbed up from their record lows during the pandemic, they remain low from a historical perspective. This can help offset some of the affordability challenges presented by high home prices.

Interested to learn about the fluctuations in mortgage rates from a wider perspective? Read this article about the historical mortgage rates in the US.

2. Income growth

As millennials advance in their careers and find new ways to earn money, their purchasing ability will also grow. This increase in income makes homeownership more attainable.

3. Increased work flexibility

The rise in flexible work arrangements has given millennials more options in choosing where they can live and work. This has expanded their housing search areas beyond the usual cities and commercial locations where the cost of living is expensive.

4. First time homebuyer programs

The US Government offers a variety of homebuyer programs designed to help first time and low-to-moderate income buyers. These home loan scheme can include:

• low or no downpayment requirements
• favorable loan terms
• minimal credit score

Mortgage lenders are also offering more affordable products and flexible terms to make property buying more accessible for those who are entering the real estate market for the first time.

5. Improved saving habits

Many millennials have become more disciplined savers in recent years, allowing them to keep much of their earnings. This helps them save more for downpayments and improve their chances of approval for mortgage applications.

6. Growing household formation

As millennials age into their 30s and 40s, more are expanding their household by way of marriage or having children. In turn, a transition from renting to owning a home has become a common pattern as larger spaces are obviously needed for growing families.

7. Other financing options

There are also other financing options for millennials who want to buy property. Some examples are:

• Fannie Mae's ready buyer program
• downpayment assistance programs
• 401(k) home loan

The rise of these housing methods is providing more creative ways to homeownership for millennials.

Alternative homeownership models

The rise of alternative homeownership models for millennials has opened doors for many who cannot afford to buy property through typical mortgage loans. Some also changed their preferences and go for cheaper housing options rather than traditional single-family homes. This means living in suburbs instead of the more popular residential locations in the US.

Other unconventional ways of homeownership for millennials are rent-to-own and co-ownership.

Rent-to-own

A rent-to-own agreement is a homeownership arrangement where:

• you rent a property for a certain period with the option to buy it
• during the rental period, you can buy the property before the lease ends
• payments will be made to the landlord as rental fee; in some cases, a percentage of this amount is added to the house price
• no downpayment will be made if you choose not to purchase the property

For anyone who’s on the fence about renting or owning, this article discusses whether it’s better to rent or own a home in the US.

Co-ownership

Home co-ownership means buying a house together with one or more owners. This can be your husband or wife or someone you are in a relationship with. It can also be family members or even close friends.

When you co-own a home, all the owners' names will be on the property's title. To put it simply, you and the others share the ownership and financial responsibility for the house.

Advice for millennials looking to buy property

All in all, there cannot be only one component that can determine if millennials will ever be able to buy a house. There are numerous factors, both positive and negative, that you must consider. These elements can also be conflicting. That’s why you should always look for the middle ground and find creative ways to achieve homeownership.

Do you think that millennials will ever be able to buy a house with the economic situation right now? Share what you think in the comments section below