By Druta Bhatt
Since 2007, millennials — those born between 1981 and 1996, who are now 28- to 43-years-old — have accumulated less wealth than previous generations did at the same age, according to research from Brookings. Having endured two major recessions in adulthood — the Great Recession and the COVID-19 pandemic — some analysts even describe millennials as an economically lost generation. Another study by the Federal Reserve of St. Louis found that while millennial households are closing the wealth gap over time, they still lagged 11% behind expected wealth levels in 2019.
A primary driver of this wealth disparity is the generation’s low homeownership rates.
Millennials are the largest, most ethnically and racially diverse generation in U.S. history. Their homeownership trends reflect shifting economic realities, cultural preferences and lifestyle choices that diverge from historical norms.
According to recent research from Freddie Mac, the millennial homeownership rate stands at just 43% , significantly lower than the national average of 65%. Even when compared to previous generations at the same age, millennials have a lower homeownership rate than 18-to 34-year-olds did in 1990 and 2000.
The millennial homeownership gap is most prominent in high demand, high-cost metropolitan areas where affordable homes is scarce, according to the Freddie Mac research. Structural barriers, including racial disparities in homeownership, exacerbate this trend. Black and Hispanic millennials, in particular, face systemic obstacles that contribute to the generation’s overall lower homeownership rates.
However, even among white millennial households, the homeownership rate remains lower than in previous generations. A study by Urban Institute identifies several key factors contributing to this trend, including delayed life milestones (like marriage and childbirth), high student loan debt , lower financial literacy, an unstable labor market, and shifting attitude towards homeownership.
Despite a strong desire to own homes, many millennials struggle with affordability. Federal Reserve’s Economic Well-Being Survey consistently identifies the inability to afford a down payment as the top barrier to homeownership. While home prices for millennial buyers are not significantly different from those of previous generations, millennials take on larger mortgage debts due to lower down payments. This has resulted in record-high mortgage burdens for millennial homeowners.
More recently, between 2019 and 2022, millennial wealth has seen a notable increase, largely driven by rising home values and an uptick in millennial homeownership, according to the St. Louis Fed . As a result, older millennials now hold 37% more wealth than expected based on historical trends. However, it remains uncertain whether this growth in millennial homeownership and millennial wealth will be sustained in the long term.
As policymakers and advocacy groups look to address millennial homeownership challenges, targeted interventions — such as affordable housing initiatives, first-time homebuyer programs, and financial education resources — will be critical in bridging the gap and fostering long-trem economic stability for this generation.