Congrats to the half (51.5%) of Millennials who have moved into their own homes, unpacked boxes and now are walking their pandemic-adopted dogs in new neighborhoods and planting flowers and pulling weeds from their landscaped lawns.
However, the remaining half or a bit fewer still rent. And many are discouraged and beginning to think they’ll become what’s now termed “forever renters.” Maybe, they will, and maybe they won’t, if interest rates go down, housing inventory goes up, they pay down debt and pull together a downpayment.
But in the meantime, their numbers reflect a changing trend. This cohort is taking longer than prior generations did to reach the homeownership milestone, according to Apartment List’s 2023 Millennial Homeownership Report.
Moreover, nothing much is expected to change, according to another survey from Home Bay, which just reported that a staggering 72% think they will never be able to afford a house. Home Bay, a real estate education platform, surveyed 1,000 renters and found they’re generally very pessimistic. In fact, two out of three or 65% said the current listing prices make them feel hopeless and 28% think homeownership is no longer part of the American Dream. In addition, 61% think Millennials and Gen Z will “never reach the same homeownership rates as baby boomers.”
Does this type of mindset also become more of a self-fulfilling prophecy?
Not all paint such a gloomy scenario, however. Gary Painter, a professor at the Sol Price School of Public Policy at the University of Southern California, thinks the younger generation will make up ground eventually, explaining, “A portion of Millennials and zoomers may have homeowning grandparents. At some point, these (generations) may be able to buy due to inheritances but will become homeowners after their parents did.”
In the meantime, what else do renters think accounts for their lack of homeownership? High home prices, say 86%, plus inflation. Painter adds another reason–low inventory, which since 2016 has dropped by 60%. And still another possibility is student debt, according to 36%. In working to pay off loans, 73% say that they don’t have the funds to make a down payment, which often requires a minimum of 20%.
So, what are solutions besides reining in spending, saving more, forgoing trips and restaurant meals, not indulging pets and in general being more financially disciplined and patient?
Painter thinks there needs to be more construction and more policies that support low-income households, including tax credits. But solving the crisis won’t be resolved easily or fast, the Home Bay survey found.