Gen Z and millennials can’t afford to buy a house

The American dream of homeownership is barely hanging on for first-time buyers, according to new data—and things aren’t expected to improve anytime soon. More young adults are staying in their parents’ homes to save money, or leaning on baby boomer relatives for house swaps, just to get a foot in the door of the housing market.

It’s a cutthroat environment out there. With mortgage rates still hovering around 7% and the median home price topping $422,000, Americans now need to earn a six-figure salary just to afford an average home, per data from the National Association of Realtors (NAR).

That steep entry point has effectively locked out many first-time buyers—mostly millennials and Gen Z—from homeownership altogether. The affordability crisis has grown so severe that the number of first-time homebuyers has dropped to historic lows.

To put that in context: back in 2004, there were nearly 3.2 million first-time buyers. Fast forward to 2024, and that number has plummeted to just 1.14 million, according to NAR figures shared with Fortune.

And unfortunately for aspiring buyers, the outlook doesn’t appear to be getting any brighter. Without major shifts in interest rates, housing inventory, or wage growth, many real estate pros say this trend will likely stick around.

“We’re seeing a reshaping of the housing ladder,” said Alexandra Gupta, a broker with The Corcoran Group, the firm founded by Shark Tank’s Barbara Corcoran.

Some first-time buyers, Gupta said, are turning to long-term rentals or co-living models as alternatives, with homeownership simply out of reach. Others are turning to family for financial help.

Based in Brooklyn, New York, Gupta said the average first-time buyer she sees is in their early to mid-30s, usually part of a dual-income household making six figures.

“But even then, the affordability gap is huge,” she said. “Many have been renting for years, trying to build savings or getting financial support from family. Some work in tech, law, or finance and are just looking for stability before starting a family. It’s not just about age anymore—it’s about access to capital.”

On the other side of the country, buyers face the same uphill battle.

“There’s a real mismatch between what people have saved and what homes actually cost,” said Tami Pardee, founder and CEO of Pardee Properties in West Los Angeles.

In that market, the median condo price is around $940,000, Pardee said. That means a monthly housing cost north of $6,600, assuming a 20% down payment, 7% mortgage rates, HOA fees, and insurance. That’s more than $2,200 above the area’s median rent.

Pardee noted that typical first-time buyers in her area tend to be in their late 20s to mid-30s, usually with dual incomes in the low- to mid-six-figure range—and many are still leaning on financial help from family to close the gap.

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