A recent survey conducted by real estate brokerage Redfin revealed that about 1 in 5 millennials believe they will never be able to buy a home. The housing market’s high interest rates and housing costs are significant barriers for buyers and sellers alike, and the low inventory exacerbates the problem by driving up home prices.
The financial setbacks faced by millennials, including entering the labor force during the Great Recession, have hindered their ability to buy a home and have made them more skeptical about homeownership as a safe investment. Many millennials have delayed buying their first home and have relied on cash gifts from family members or inheritances to afford down payments. Even when millennials have been able to take advantage of record low mortgage rates during the pandemic, not everyone has been in a financial position to do so.
According to Redfin chief economist Daryl Fairweather, Generation Z, born between 1997 and 2012, may be more optimistic about buying a home due to their positive labor market experiences. Labor data shows resilient job market activity despite high interest rates. However, millennials are more pessimistic, believing they missed their golden opportunity.
The current 30-year fixed mortgage rate hovering above 7% makes homeownership seemingly impossible for many. The high mortgage rates and housing costs are shaping the outlook of millennials in the housing market while Generation Z remains relatively positive.
Sources: Redfin, Fox Business