Buying a home has long been part of the American dream. For millennials especially, the Great Recession hit just in time for the oldest of them to have to delay jumping on that train early in life.
Fortunately, mortgage rates dropped into the 5% range immediately after the real estate crash and remained low through the recovery, giving this and other generations a chance to catch up with their home-buying goals while homes were still relatively inexpensive.
But since the COVID-19 pandemic, everything has been more expensive, and a lot of millennials feel like they’re never going to reach their financial goals. If you’re a millennial, the good news (or maybe the not-so-good news) is that if you haven’t started your home-buying journey, you’re hardly behind the times.
Let’s see what that looks like and how other generations compare.
Generational homeownership trends
It probably comes as no surprise that baby boomers (born 1946–1964) are most likely to be homeowners. After all, they’ve been in the workforce longer than almost anyone, and if they haven’t yet retired, they may be in senior level jobs with high incomes for their fields. In short, they can afford to be homeowners, even today.
Currently, 74% of boomers own their own homes. But this generation reached a 50% homeownership level in the mid-to-late 1980s.
The Silent Generation (born 1928–1945) have had solid homeownership levels since before data was collected. They’re only recently starting to see their homeownership rates drop. For 2023, that number was 70%.
This generation is likely seeing a decline in homeownership due to wealth transfer to younger generations when forming multi-generational households or outright selling their homes to move into senior specific housing.
Generation X (born 1965–1980) finally saw half of their population reach their homeownership goals around 2005, just in time for the Great Recession. But they largely managed to hold on to their homes through all of that chaos. Today, they’re sitting at a 65% homeownership rate.
Millennials (born 1981–1996) haven’t yet reached their 50% point, but it should be coming soon. They’re currently at 45% homeownership, as of 2023, but are showing a steep upward trend. They’re determined to buy a home, it seems, despite the current market conditions.
Generation Z (born 1997–2012), surprisingly, already can call 8% of its population homeowners. A few got their start with homeownership very early.
| Generation | 2023 Homeownership Rate |
|---|---|
| Silent (1928–1945) | 70% |
| Baby Boomers (1946–1964) | 74% |
| Generation X (1965–1980) | 65% |
| Millennial (1981–1996) | 45% |
| Generation Z (1997–2012) | 8% |
Data source: Apartmentlist.com.
Where do millennials buy homes?
According to a study by ApartmentList.com, millennials are buying in every size city and town, but are seeing most of their success in lower-population areas.
In fact, the millennial homeownership rate in non-metro areas is the highest, at 50% homeownership. Metro areas under one million people still boast high millennial ownership at 44%, more or less at the national average.
From there, it gets more grim, with millennials in cities between one and five million people owning just 41% of the time. And in cities with over five million people, millennials own just 33% of the time.
Millennials have done well in the Midwest, with cities like Minneapolis, Grand Rapids, Cincinnati, Louisville, Indianapolis, and St. Louis boasting ownership rates of 50% or higher.
Home-buying tips for every generation
Buying a home today is extremely challenging, and it’s likely to get harder now that rates are set to drop further. People who’ve been sitting on the sidelines may well be ready to reenter the fray. So, to stay competitive in the housing market, keep these tips in mind.
Get a pre-approval letter before you shop
Some markets are still having multiple offer situations on the best homes, and you don’t want to be caught empty handed if you’re in one of them. Talk to a mortgage lender — or a few — and get a full pre-approval before you shop so if you make an offer, you look like a serious buyer.
Be prepared for the expenses of home buying
You’ll need a lot of money to buy a home, even if you’re getting a loan. Unless you’re using a specific first-time home buyer program, you’ll need at least 3.5% of the sale price for your down payment, plus significant additional cash for closing costs, prepaid items, home inspections and moving expenses. Your lender will be able to give you a rough estimate of how much cash you’ll need to bring to closing.
It will be a marathon, not a sprint
Unless you’re incredibly lucky, you’ll likely spend weeks or months looking at homes. You can speed up the process by knowing what you’re looking for — online home listings can give you a real sense of what to expect in your price range. Wait until you’re pre-approved to start looking online, though, or you may set yourself up for a big let down if you start out by looking in the wrong price range.
No matter your age, owning a home can give you a sense of security and allow you to create some generational wealth to pass on to your children or other family members. It’s not for everyone, but if it’s for you, be patient and make careful decisions with this major purchase.