Homeownership used to be a milestone of adulthood for Americans, but for Gen Z, the financial goalposts keep moving further away.
While boomers were able to buy their first homes in cash, the average age of first-time home ownership has now jumped to a record of 40 years old, with high mortgage rates and soaring prices to blame, according to the National Association of Realtors.
In comparison, about four years ago, the average age was just 33. When the survey was first conducted in 1981, the median age was 29.
Today, the median price of an existing home is $415,200, up more than 50% since 2019. Meanwhile, mortgage rates are roughly twice as high as they were in late 2021. When boomers bought their first homes in 1981, the median home price was just $68,900—though mortgage rates averaged nearly 16 percent at that time. In 1981, the typical monthly mortgage payment went from around $1,100 to $2,650. Today, the average mortgage payment is around $2,067.
Gen Z ranges in age from 13 to 28—meaning even the oldest members are still a decade younger than the median first-time homebuyer, making homebuying a midlife achievement. This may be because, as young buyers scrape together down payments, boomers are sitting on $82 trillion in wealth—more than twice what Gen X has and four times as much as millennials.
Being locked out of home ownership not only pushes back the timeline of goals for Americans, but it could also cost Gen Z roughly $150,000 in lost equity. Building wealth through rising home values is one of the main reasons why boomers hold so much more wealth than younger generations today. Today, boomers alone are estimated to own up to $19 trillion in home-equity wealth in the U.S.
Gen Z still thinks homeownership is part of the American dream
Despite affordability headwinds, Gen Z still thinks homeownership is part of the American dream.
A survey from realtor.com found that two-thirds of respondents see homeownership as an important lifetime goal, and even as they remain locked out of the housing market, more than half still consider homeownership to be part of the American dream. In addition, 69% agree that real estate is an opportunity to generate wealth.
Recognizing the importance of homeownership, almost half of the respondents say they are ready to buy a home, but only 36% say they are financially prepared.
In the meantime, most younger Americans are still renting—and even then are so cost-burnered they are dipping into their retirements and skipping meals just to get by.
Americans still think 30 is the average age to buying a home
Yet the perception hasn’t caught up with reality. Americans still think 30 is the average age to buy a home, which may sound more than unrealistic to younger Americans today.
The recent survey from Empower found that Americans think you should land your dream job at 29, buy your first home at 30, and earn six figures by 35.
Despite Americans’ optimism, Gen Z are stuck kicking it with their parents due to skyrocketing living prices, workers are facing a frozen white collar job market with stagnant wages, household debt is at an all-time high amid rising interest rates, and people are draining out their 401(k)s like bank accounts. For Gen Z today, the realtor.com survey found that, over home ownership, career advancement ranks as the top milestone, with 49.5% listing it first, ahead of buying a house, getting married, or having children.