An alarming gap in homeownership between generations

Added: 2026-05-20

[00:00:00]The difference in home ownership rates between Gen Z and baby boomers is now the biggest generational gap on record according to Clever Real Estate, just 4.5% of Gen Zers own homes compared to 73.1% of baby boomers. That's a more than 68% divide. Joining us now is bank rate principal analyst Ted Rosman. Good morning.

[00:00:24]>> Hi, good to be here.

[00:00:25]>> That's a pretty alarming gap. I mean, what are some of the biggest financial factors limiting Gen Z's ability to buy a house?

[00:00:31]>> It is a big gap, and I know every generation feels like they've had it tough in some respects, but there are some numbers that are really working against Gen Zers. One is the fact that home prices have been jumping significantly more than inflation in recent years, especially the past 15 years. Home prices have really vastly exceeded the overall inflation rate. We also have a lot of unique financial pressures on Jenzers. When you think about higher education costs, child care costs, they're really facing higher costs throughout their financial lives.

[00:01:02]>> Jenzie isn't the only generation struggling with home ownership.

[00:01:05]Millennials now outnumber baby boomers, but own 17 million fewer homes than them. What would have to happen to close this gap?

[00:01:14]>> One thing that would definitely help would be lower mortgage rates. We thought we might get them earlier this year where in February the average 30-year fixed mortgage rate briefly fell below 6% for the first time in 3 and 1/2 years. And we thought it could be headed as low as the mid5s this year. Of course, the war in Iran has created all this inflationary pressure, higher oil and gas prices. That's leading to higher interest rates. Right now, the average 30-year fixed rate is more like six and a half%. And that is a significant jump.

[00:01:42]It's just kind of one more log on the fire, unfortunately, because prices have backed off a little bit in many markets, but prices are still high, rates are still high. It's really a double whammy for the prospective buyer.

[00:01:55]>> What kind of impact will this lack of home ownership have on the younger generations, do you think?

[00:02:01]>> Home ownership is one of the best tickets to building wealth over time.

[00:02:05]>> [snorts] >> Some of that is just because of the forced savings angle that every month when you put that mortgage payment in, you're building equity. And that is a really significant thing. The Federal Reserve has found that the median net worth of a homeowner is about 40 times the median net worth of a renter. Now, not to say that renters can't get ahead, but they do need to be more disciplined about setting money aside in investments because rent is not building equity in the same way that home ownership is.

[00:02:35]That forced savings thing is a big deal.

[00:02:37]80% of Americans still view home ownership as part of the American dream.

[00:02:42]>> The home ownership rate for Americans under 30 is 36% lower than it was 20 years ago. Do you see that changing or is renting the new normal?

[00:02:51]>> Affordability challenges are such that it probably won't change a lot in the near term. We are seeing people get creative. We're seeing more young people buying homes with friends and and not just romantic partners, but platonic friendships where two, three, four friends may be going in together on a home or condo or apartment purchase.

[00:03:11]We're also seeing more multi-generational housing. Sometimes that's parents and their adult children.

[00:03:16]Sometimes it's even grandparents and adult grandchildren. These are some of the levers that people are pulling.

[00:03:23]>> Bank rate principal analyst Ted Rosen, thank you so much.

[00:03:26]>> No problem. The