Noting the lack of affordability as the top barrier, nearly 1 in 5 millennials and 12% of Gen Z believe they will never own a home, according to a new report from Redfin.
Due to high home prices, roughly half of Gen Z and millennial renters believe they’re unlikely to purchase a home in the near future. Other affordability-related reasons were noted as barriers, including 46% of millennials and 33% of Gen Zers saying their lack of ability to save for a down payment is a concern, followed by more than one-third of both groups saying mortgage rates are too high.
In addition, both groups fear they’re unable to afford monthly mortgage payments, and about 21% of Gen Zers and 16% of millennials say they need to pay off student loan debt before they’re able to purchase a home.
“The worsening housing affordability crisis has an outsized impact on Gen Zers and millennials because they’re much less likely to own a home than older generations. That means many young Americans don’t benefit from rising home prices by gaining equity. Instead, these would-be first-time home buyers bear the burden of high prices, high down payments, and high monthly mortgage payments, without profits from a previous home to offset the cost,” says Redfin chief economist Daryl Fairweather.
Compared with 71% of Gen Xers and 79% of baby boomers, 26% of Gen Zers and 52% of millennials own their home. Of those who do not own a home, roughly 40% are working second jobs to save for a down payment and about 25% plan to use a cash gift from family.
About 41% of Gen Zers and 36% of millennials say they are willing to work a second job for a down payment, while 20% of Gen Z and 15% of millennials plan to use an inheritance.
“Many young people don’t have a choice between renting and buying. They’re renting their home because even though rent payments have increased, too, it’s still more affordable than buying in much of the country—and renters don’t need a down payment,” Fairweather adds.
The two age groups also cite investments as a way they plan to fund down payments, with just over 20% of both Gen Zers and millennials planning to sell stock and roughly 15% of both generations planning to sell cryptocurrency.
Conducted by Qualtrics in May and June, the survey was fielded to 5,079 U.S. residents who either moved in the last year, plan to move in the next year, or rent their home. This report focuses on the 1,340 Gen Z and 1,973 millennial respondents.