Some young Americans are giving up on ever owning a home, per CNN.
Americans are grappling with the toughest housing market in a generation, making the dream of owning a home increasingly elusive for many young people.
Mortgage rates have surged in recent years, reaching their highest levels in over two decades last fall. Although rates have slightly eased since then, home prices remain stubbornly high, and the limited housing inventory fails to meet demand. This combination has made housing significantly unaffordable.
While falling mortgage rates in recent weeks offer some relief, economists suggest that home prices may remain high. This challenging environment is particularly daunting for young, first-time buyers who must save for a down payment and improve their credit scores, all while Baby Boomers are reluctant to downsize from their larger homes.
Renters are not faring much better, with rents remaining near record highs, and half of tenants reporting that they struggle to afford their payments.
Surveys and polls reflect widespread concern over America's affordability crisis, although specific data on young people's sentiments is limited.
High mortgage rates are a key reason for the pessimism surrounding the housing market. However, there has been some positive news recently.
The Federal Reserve's indication of future interest rate cuts, following a decrease in inflation, could impact the average 30-year fixed mortgage rate. Nonetheless, economists doubt rates will fall below 6% this year.
The possibility of lower monthly mortgage payments has already lifted Americans' outlook on the housing market, according to Fannie Mae's National Housing Survey.
However, affordability remains challenging, with family incomes and single-family home prices presenting significant hurdles. The median home sale price in 2023 was $389,800, up about 1% from 2022 and a record high. While lower mortgage rates could improve affordability, lasting change may require better zoning laws to increase housing supply.
Redfin's chief economist, Daryl Fairweather, advises young first-time buyers to continue saving for future improvements in housing conditions, consider investing in an index fund given the strong stock market, be realistic about neighborhood choices, and explore more affordable housing options such as condominiums or townhouses.
