(NewsNation) — Homeownership has long been a cornerstone of the “American dream,” but mounting affordability challenges have put that goal out of reach for many.
These days, younger and older generations view the dream very differently. Nearly 70% of adults over 65 believe the “American dream is still possible,” compared with just 39% of those under 30, according to a 2024 Pew survey.
Housing costs appear to be a major driver of young adults’ skepticism — a problem that has been years in the making.
Homes are selling at the slowest summer pace in a decade: Redfin
New construction plunged during the Great Recession, shrinking the nation’s housing supply and worsening a shortfall that persists to this day. The inventory constraints came at a time when home prices had already been outpacing wages for years.
Then the pandemic hit. Record-low mortgage rates and pent-up demand sparked bidding wars, sending home prices soaring. Investors piled in too, tightening supply and helping drive inventory to historic lows.
The dust has since settled, but affordability remains elusive. Mortgage rates are higher, and many owners who locked in rock-bottom rates aren’t eager to sell. Prices, meanwhile, keep climbing.
Today’s renters put their chances of ever owning a home at just 1 in 3 — down from more than 50% before the pandemic, according to the Federal Reserve Bank of New York.
It’s a striking shift in how Americans view their financial prospects, driven by fundamental changes that didn’t exist decades ago.
Here are four signs this isn’t your parents’ housing market.
Homebuyers are older than ever
Median age of homebuyers (National Association of Realtors 2024)
1981: 31 years old
2024: 56 years old (record high)
In the 1980s, the typical homebuyer was in their early 30s. By 2024, that age had risen to 56 — a record high, according to the National Association of Realtors (NAR).
Baby boomers (ages 60 to 78) now represent the largest generational group of homebuyers, accounting for 42% of buyers between July 2023 and June 2024.
Millennials (ages 26 to 44) are the nation’s largest generation but made up just 29% of buyers, NAR found. They were also far more likely to be raising kids at home.
Baby boomers are buying more homes than millennials
Even more striking is the contrast in how each group paid. Roughly half of older boomers (ages 70 to 78) paid in cash, skipping financing altogether. On the other hand, 95% of millennials financed their purchase, and 40% relied on family and friends to help with the down payment.
The stark generational contrast shows that today’s homebuyers are trending older — but more importantly, it highlights who is competing for homes. These days, younger generations are going head-to-head with older, established homeowners for houses.
Share of first-time buyers at all-time low
Market share of first-time buyers (National Association of Realtors 2024)
1981: 44%
2024: 24% (record low)
It’s easier to buy a home when you already own one. Today’s housing market increasingly pits homeowners with built-up equity against younger buyers trying to break in.
Before 2008, first-time buyers typically made up 40% of the market. Last year, their share fell to 24% — the lowest since the NAR began tracking in 1981.
The shift underscores how inaccessible the housing market has become for new buyers, jeopardizing the primary path to wealth for millions of Americans.
1 in 5 homebuyers willing to sacrifice safety for affordability
A 2024 Redfin report found that empty-nest baby boomers own nearly 3 in 10 (28%) large U.S. homes, twice as many as millennials with kids. Elevated mortgage rates and a lack of affordable starter homes have contributed to the gap, incentivizing many older adults to stay in place.
In theory, a so-called “silver tsunami” could free up larger homes as older Americans downsize. But that same shift could intensify competition for entry-level homes, pushing prices even higher.
Wages haven’t kept up with home prices
Median sales price for new houses sold in the U.S. (Census Bureau) *not adjusted for inflation
1984: $79,900
2023: $428,600
Change: +436%
Median household income (Census Bureau) *not adjusted for inflation
1984: $22,420
2023: $80,610
Change: +260%
Mortgage rates may be lower today than in the 1980s, but wages haven’t kept pace with soaring prices.
In 1984, a new home cost 3.6 times the median household income; by 2023, it was 5.3 times — a gap that widened in recent years.
Rent has risen faster than wages in most US cities
Homebuyers now need an annual household income of $116,986 to afford the typical U.S. home, according to a recent Bankrate study. That’s a nearly 50% jump from early 2020, when the income needed was $78,236.
A separate Harvard study found that the price-to-income ratio in 2022 was the highest on record, dating back to the early 1970s. In some West Coast markets, including San Jose and San Francisco, typical homes sold for more than 11 times the median income.
Homebuyers are competing with investors
Share of investor buyers (Realtor.com)
2001 (Q4): 1.9%
2024 (Q4): 13.5%
Today’s homebuyers aren’t just competing with other families — they’re increasingly up against deep-pocketed investors.
In 2024, investors purchased 13% of homes sold, up from just 2% in 2001, according to Realtor.com. In total, that amounted to 610,000 homes last year.
States like Missouri, Oklahoma and Kansas saw investors buy an even higher share — roughly 20% of homes last year.
Investors snap up growing share of US homes as traditional buyers struggle to afford one
Realtor.com found that most investors (62%) paid all cash, nearly double the 33% rate of all homebuyers who did the same.
“Budget-conscious buyers often find themselves in direct competition with investors for the most affordable properties, a contest many are unable to win,” Realtor.com senior economic research analyst Hannah Jones said in a June report.
