After only a few months, Chris Swanson is sick of shopping for houses in what the 39-year-old calls a “dumpster fire” of a market for first-time buyers like himself.
Though he has a steady job and has paid off his student loans, it feels like he’s two decades too late: He missed out on rock-bottom interest rates, and homes are far more expensive. Landing on the one property that will fit his needs and his budget is daunting enough, but there’s also pressure to move fast. “I’m in that weird position,” said Swanson, a marketing professional from Mentor, Ohio.
Homeownership — the main driver of wealth for most Americans — is out of reach for large swaths of the population. But the pinch is most pronounced for millennials, who are buying homes at a slower pace than those before them. Baby boomers, in fact, represented the largest share of home buyers this year — a spot millennials had held since 2014 — according to research by the National Association of Realtors.
“Boomers are absolutely in the driver’s seat,” said Jessica Lautz, deputy chief economist at NAR, because they have built up home equity and can pay in cash. “Unfortunately, that has pushed many millennials to the sidelines.”
Those born between 1981 to 1996 have been called the “unluckiest generation.” Since entering the workforce, they’ve experienced the slowest economic growth of any age group. They’ve also been weighed down by student debt and child-care costs, Lautz said.
Rising interest rates and persistently high asking prices have further eroded their buying power. The median U.S. home sold for $416,100 in the second quarter of 2023, a 26 percent jump since early 2020, Federal Reserve data show. Median sales prices were significantly higher in the Northeast ($789,600) and the West ($547,900).
Meanwhile, the average 30-year, fixed-rate mortgage is now hovering near 7 percent, nearly three times the 2.6 percent recorded in early 2021.
As a result, first-time home buyers are older, with a median age of 36, Lautz said. That’s the oldest since NAR started keeping track in 1981, when it was 29. As the age climbed, she noted, the share of first-time home buyers sank to “historic lows.”
The high interest rates are “a real burden on young people who don’t have the high salaries of old folks like me,” said Joe Gyourko, 67, a professor of real estate at the University of Pennsylvania Wharton School. “You can’t get around it, and you’ve got to make a decision: Do I value the house enough?”