Young Adults Worry They’ll Never Be Able to Afford a House

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Many Americans who are not yet homeowners are feeling disheartened about their prospects of achieving homeownership. According to a recent survey by Northwestern Mutual, 53% of non-homeowners believe that owning a home will never be financially feasible.

While Northwestern Mutual did not provide data on homeowner sentiment in previous years, other studies indicate that affordability has become increasingly challenging for first-time buyers.

The National Association of Realtors revealed that the average age of homebuyers has risen to 56, up from 49 in the previous year. The typical age of a first-time homebuyer also increased to 38 from 35 in 2023. This trend highlights the difficulties younger Americans face in entering the housing market due to limited access to the necessary capital.

The costs associated with homeownership have surged, particularly impacting Gen Z and millennial buyers. Realtor.com reported that the median list price in February reached $412,000, a 39.2% increase since February 2019. Additionally, the price per square foot rose by 54.8% during the same period.

Although mortgage rates have slightly decreased from their recent peak, the average rate for a 30-year fixed-rate mortgage remains high at 6.65%. The ongoing inflation and the possibility of interest rate hikes could further constrain prospective buyers.

In addition to housing affordability challenges, households are grappling with inflation, their primary financial concern, which makes saving more difficult, as indicated by Northwestern Mutual.

The survey by Northwestern Mutual identified several reasons why people believe owning a home is unattainable:

Lack of sufficient savings for a down payment (64%)

High mortgage rates (48%)

Intense competition in the housing market (43%)

Interestingly, Gen Z non-homeowners are slightly more optimistic compared to older age groups. While 58% of millennials believe homeownership is out of reach, only 49% of Gen Z respondents share this sentiment.

John Roberts, chief field officer at Northwestern Mutual, noted, “When it comes to whether people believe they can afford to own a home, age plays a significant role. Gen Z individuals are younger and have more time to work towards achieving homeownership.”