Millennials may be the largest generation, but it looks more and more like they’re going to own the smallest percentage of houses—at least from a generational standpoint. Apartment List’s 2021 Millennial Homeownership Report [1] takes a look at the phenomenon and the generation causing it.
By the age of 30, 51% of baby boomers owned homes. At the same age, 48% of gen Xers closed on real estate. But millennials are hovering at 42%, and that number is likely to drop even further.
Each year, more and more millennials report that they have no plans to ever stop renting. In 2018, 11% never saw themselves as homeowners. In 2019, that number rose to 12%. In 2020, the percentage of millennials who never saw themselves buying a home jumped to 18%.
The biggest roadblock is affordability, and the rise in real estate prices caused by COVID-19 definitely didn’t help. Even for the shrinking percentage of millennials with plans to buy a home, 63% of them report not having money for a down payment.
At first glance, it would appear that millennial homeownership is on the rise—and it is—but it still lags far behind where previous generations were at the same stage of their lives. In the last three years, millennial’s first-time purchasing percentage grew 2%, from 31% to 33%. However, after the Great Recession, over half of home purchases were by first-time buyers. That’s a significant drop in a relatively short amount of time.
Affordability and the perception of affordability continue to hinder millennials from homeownership. Although interest rates recently dropped to historic lows, down payments were and continue to be a huge hurdle. In fact, 74% of millennials who said they’d never buy cited overall affordability as the reason, compared to 34% who prefer the flexibility of renting and 32% who didn’t want to deal with unforeseen maintenance and expenses.
There’s also a sizable percentage of millennials who view homeownership as a financial risk that isn’t worth it—that number is 21%.