Thankful for Homeownership: First American’s Sam Williamson Looks at Generational Trends
In the spirit of Thanksgiving, a time for reflection and gratitude, it’s worth pausing to consider one of the enduring pillars of the American Dream: homeownership. A home is more than just a place to live – it represents stability, security, and a primary driver of wealth creation in this country. Using the latest 2023 Current Population Survey data, we analyzed homeownership rates by generation to determine how patterns of homeownership differ by stage of life among all the generations around the Thanksgiving table.
Why Are Younger Generations Taking Smaller Bites of the Homeownership Turkey?
Much like a cherished family Thanksgiving tradition, homeownership demand evolves with societal and familial changes. Our analysis shows that homeownership rates are low across each generation in early adulthood, as it’s common to rent while establishing career and family. Moving along the homeownership-age curve, homeownership rates rise sharply for boomers and Generation X in their mid-to-late 20s and early 30s. In contrast, millennial homeownership rates are still rising in their late 30s. In other words, larger shares of younger boomers and Gen Xers purchased homes at earlier ages compared to millennials at the same stage of life.
As a result, we find significant generational gaps for early ages, with newer generations having lower homeownership rates at the same early age. For example, at age 31, both boomers and Gen Xers had a homeownership rate of 49 percent, while millennial homeownership lagged at 42 percent – a 7 percentage point gap – despite millennials having similar income and higher levels of educational attainment.
What’s Carving the Homeownership Gap?
Economic and lifestyle factors influence homeownership rates. For example, economic factors, such as credit conditions, labor market trends, the cost of education, and housing affordability, are important drivers of homeownership. So too, are lifestyle decisions, such educational attainment and family formation. Millennials, in particular, have spent much of their early home-buying years coping with significant economic downturns (i.e., the Great Recession and the COVID-19 pandemic). They have also delayed marriage and having children, face rising student debt burdens, and a challenging housing market, all of which may postpone the decision to purchase a home.
Yet, homeownership rates among older millennials confirms that homeownership demand for this generation has been delayed, but not denied, compared to their generational predecessors. Millennials have closed the homeownership gap. At age 38, the millennial homeownership rate is essentially tied with Gen X at 66 percent. Assuming this trend holds, older millennials may catch up with baby boomers, likely reaching the 70 percent mark by their mid-to-late 40s.
Although it’s too early to make definitive conclusions, early data also show that Gen Z – the generation that has recently started sitting at the “adult” homeownership table –already has a higher homeownership rate compared to millennials when they were in their early-to-mid 20s, despite coming of age during the COVID-19 pandemic. This trend may be partly attributed to historically low mortgage rates and the rise of remote work during the pandemic, which boosted the demand for housing. Their resilience, combined with projections that they will surpass millennials as the most well-educated generation yet, are encouraging signs that they may further close the homeownership gap.
A Thanksgiving Toast to Homeownership Across Generations
Our analysis of the homeownership rate by generation highlights that there were significant gaps for millennials in their mid-to-late 20s and early-to-mid 30s compared to baby boomers and Gen Xers. However, older millennials have quickly closed the generational homeownership gap, suggesting that homeownership demand among younger generations may be delayed, but not denied. Though the homeownership journey has evolved, much like Thanksgiving traditions, the stability, security and wealth-generating benefits of homeownership remain a blessing celebrated by all generations at the Thanksgiving table, and for that, we are thankful.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes submissions from member firms. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
