Homeownership Slipping Away for Young Americans
Many Americans who don't already own a home feel that becoming a homeowner is becoming an impossible goal. According to a recent survey from Northwestern Mutual, over half of these non-homeowners (53%) believe that owning a home will never be affordable for them.
Research is showing that buying a home is indeed getting more difficult for first-time buyers. A report from the National Association of Realtors highlights that the typical age of homebuyers is increasing.
In just one year, the average age rose from 49 to 56, and the age for first-time buyers went from 35 to 38 in 2023. This suggests that younger people, such as Generation Z and millennials, are finding it particularly tough to buy homes due to not having enough starting capital.
House prices have been climbing, with Realtor.com noting a significant increase. As of February, the median list price for a home was $412,000, a jump of 39.2% since February 2019. Even the cost per square foot of property has risen sharply, by 54.8%.
While mortgage rates have slightly decreased from their peak of over 7% in mid-January, they remain high.
For example, the average rate for a 30-year fixed-rate mortgage recently was 6.65%. With inflation remaining high above the Federal Reserve's target, there's a chance that high mortgage rates could continue.
The general increase in prices due to inflation is also making it harder for individuals to save money, impacting their ability to gather enough for a home down payment. The challenges to saving and affording a home include high home values, steep mortgage rates, and a very competitive housing market.
Despite the grim outlook, younger non-homeowners, particularly those from Generation Z, are somewhat more hopeful about their chances compared to older populations.
While 58% of millennials think homeownership is out of their financial reach, a slightly lower percentage (49%) of Gen Zers feel the same way. This difference could be because Generation Z members are still younger and have more time to save and prepare for future home purchases.
In summary, owning a home is becoming increasingly difficult, particularly for younger generations, due to soaring prices and economic pressures. However, younger people hold on to some optimism, hoping time might turn things in their favor.
Government programs like FHA loans allow for down payments as low as 3.5%, while many states offer their own grants and low-interest loans for first-time buyers.
Check out: Down Payment Strategies for First Time Homebuyers
Despite these options, awareness remains low, underscoring the need for better outreach to help potential buyers access available assistance.
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