The average millennial buys their first home at age 36, a statistic that suggests it is taking longer than previous generations to hit a major milestone in building wealth.
Thirty-six marks the oldest average age for Americans buying their first house, according to 2022 data from the National Association of Realtors. The average age for first-timer buyers was 33 in 2021, NAR said.
“There’s no getting around how tough buying a home can be in today’s high-interest rates and high-price housing market,” Jacob Channel, senior economist at LendingTree said Tuesday.
But there’s a reason it’s taking adults born between 1980 and 2000 so long to buy property, Washington Post business reporter Julian Mark told CBS News. Part of it is uncomfortably high mortgage rates, but the main issue is much bigger, he said.
One economic downturn after another
Millennials have spent their working years going through the dot-com bubble burst in 2000, the Great Recession of 2008 and, most recently, the coronavirus pandemic, Mark said. Those economic events have depressed millennials’ wage growth and “essentially stunted their ability to hit major milestones like homeownership,” he added.
With those downturns in their rear view mirror, millennials now face a challenging housing market in which fewer homes are available for sale, interest rates have climbed past 7.1% and asking prices are more expensive. The national median home price hit $402,600 in July — up from $359,000 at the start of 2023; the typical mortgage on a single-family home is now $2,051 compared to $1,837 a year ago, according to NAR.
Mortgage rates have grown so much that some real estate agents have started advising their clients to buy the home and wait for interest rates to fall to refinance — a phrase the industry calls “Marry the House, Date the Rate.” That strategy may work “but you have to be prepared to pay those interest rates perhaps forever because it’s unclear when they will drop and by how much,” Mark said.
“Try to keep hope”
“As tough as it may seem, those who want to buy, but can’t afford to right now, should try to keep hope,” Channel said.
But that’s proving to be difficult. Roughly half of Americans who dream of owning a house one day worry they never will, a LendingTree survey found.
Even though millennials make up the largest population in the U.S., more baby boomers are buying homes these days, according to NAR data from March. Baby Boomers made up 39% of homebuyers in 2022, compared with 28% by millennials.
Many baby boomers are able to own more homes because that generation bought property decades ago while it was cheaper, thus building more home equity, Mark said. According to NAR, baby boomers are purchasing new homes for a number of reasons, most revolving around retirement and the desire to be closer to friends and family or downsize to a smaller home, now that their kids have flown the coop.