Maria Thomas and Tabor Loynd are among the millions of young Americans who question if they will ever be able to buy a home. Thomas, 29, is currently renting an apartment in the Bronx, New York, and Loynd, 23, lives in Yarmouth, Cape Cod, Massachusetts. Both are working full-time jobs and trying to save as much as they can, but they may or may not plan to become homeowners any time soon.
Their stories are not surprising, as mortgage interest rates rise and home prices remain out of reach for many. Nationwide, the share of first-time home buyers dropped to a record low of just 26 percent–down from 34 percent last year and a peak of 50 percent in 2010.
“This isn’t that surprising considering the higher mortgage interest rates, continued high home prices, a low share of inventory and inflation,” Brandi Snowden, director of member and consumer survey research at NAR, told The Epoch Times. “A lot of younger people are now opting to live at home with their parents longer or are living with roommates or other family members.”
Thomas currently lives with a partner, and at one point was considering buying a condo. “I ultimately decided against it because I wasn’t sure if I was ready to make a commitment to stay in New York,” she said. “Plus, there are so many moving hands to purchasing a home or condo and I hear so many horror stories. That also makes me hesitate about such a serious purchase.”
Loynd is living at home with his father and saving to buy a home in southwest Virginia, a much more affordable area of the country. Like the New York metro area, home prices in Cape Cod have skyrocketed over the past few years. “I want to enjoy having peace and quiet with enough land to be able to work on my truck or do some other projects without having to deal with neighbors,” he said.
According to the NAR outlook, just 2 percent of Gen Z (young adults from 18 to 25 years old) are part of the home-buying public. Younger Millennials (ages 26 to 34) comprise 18 percent of buyers, while older Millennials (ages 35 to 41) are in the 25 percent range. Gen X (ages 42 to 57) represents 24 percent of buyers, but that percentage drops to 17 for younger Boomers (ages 58 to 67) and just 12 percent for older Boomers (ages 68 to 76). Conversely, those two groups show 23 and 19 percent respectively for the home-selling population.
Gen Xers were also found to have the highest household incomes of any generation at $125,000 in 2020, followed by older Millennials with a median household income of $110,300. “The household composition is also changing,” added Snowden. “About 60 percent of recent buyers were married couples, 19 percent single females, 9 percent single males and 9 percent unmarried couples.”
Chances of Homeownership Are Fading
Snowden suggested that today’s high rents nationally may be preventing younger people from saving enough money for a down payment on a home. Rent.com reports the current median national rental for a one-bedroom apartment is $2,002.For many young adults today, the prospects of home ownership are fleeting. “A lot of them are starting out with huge college loans or other debt and many have given up on the American dream,” Clara Chow, co-founder and chief revenue officer at Pinata, a real estate technology startup, told The Epoch Times. “It can be demoralizing–like they’re in this horrible waiting room and not going anywhere.”
Pinata’s free app allows renters to reap rewards on everyday needs with gift cards for gas, groceries, restaurants, and more, plus build their credit rating at the same time.
Quoting a recent report from Apartment List, Chow said that one in five young adults have given up on owning a home since the average time to save for a typical 20 percent down payment is a decade. “With changes in the economy, there’s a lot more freelance work with no medical benefits,” added Chow. “Add to that the hyperinflation, and you can see a trend leading to a real gap in financial health.”
On a positive note, admits Chow, the advantages of renting include more flexibility in changing living locations and saving money on those hidden homeowner expenses like roof replacement, plumping costs, landscaping, high utilities, and general maintenance. “Gen Z and Younger Millennials are very mobile generations, and they like to go out, travel, and relocate, if need be,” she explained. “They’re not bound to their locations by a home. They can be digital nomads.”
Thomas agrees. “As an unmarried adult with no kids, I can pick up and move anywhere at any time for any reason,” she said. “You also have to consider the market, the time spent house hunting, and if you’ll make a profit. If you do buy, then you have to hope that your purchase is good enough for you and your future.”
Loynd is also unmarried with no children and hopes that a more rural area in Virginia will offer homes that are more in his price range. “I have a couple of friends there and it seems like a great place to live,” he said.
NAR did indicate that the median distance buyers moved from their previous homes more than tripled from the distance in the previous four years, from 15 miles in 2018 to 2021 to 50 miles this year. The shares of homes purchased in small towns and rural areas rose from 19 to 29 percent just in the last year. “Now that more people have the option of working remotely, this could be a continuing trend as people seek more affordable areas to live,” added Snowden.
The median number of weeks that buyers searched for a home has also increased from 8 to 10 weeks. However, buyers are still typically purchasing homes for 100 percent of the asking price. Over 28 percent are still paying more than the asking price. The typical down payment for first-time buyers is just six percent.
Chow believes the future may hold a different type of American dream with more people opting to rent. Thousands of today’s rentals also include single-family homes that investors have purchased as income-producing units. “I think we’re going to see future generations embrace the renter nation,” she said.
For Thomas, this trend is showing her the direction of where the market could be headed. “It seems like big corporations want you to rent instead of own and if there are fewer single-family homes for sale, the more valuable they will become,” she said. “Maybe it won’t be a bad idea to purchase a home now and potentially sell the property for profit in the future.”
