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How the Dream of Homeownership Is Becoming a Pipe Dream for Many Middle-Class Millennial Families

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Inflation and the cost of living are at the top of many Americans’ minds heading into 2025. While we don’t know what the new year holds, we do know how Americans feel about their finances and home buying based on a new study.

The outlook on home buying trends in 2023 shows that most Americans (61%) cannot afford a home right now, and 1 in 5 believe they’ll never be able to afford a home.

The Housing Market

A nationwide survey by Lombardo Homes revealed that 75% of millennials would prefer to buy, yet only 51% are actively saving for that down payment. That’s a 38% decrease from 2021 when 83% of millennials reported actively saving for a home purchase. What’s changed?  

Financial hardships and home-buying knowledge are among the top things getting in their way:

  • 74% have debt inhibiting their savings: 54% credit card, 40% student loans, 26% auto loans. 
  • 75% can’t afford a down payment, 48% can’t afford something “nice” enough to want to buy
  • 77% say their rent is too high to accumulate savings 

Even if they had the money right now, the 2024 report revealed that more than half (58%) of millennials don’t feel prepared to buy a home. Many millennials are unable to calculate or are unfamiliar with basic mortgage math. Of those surveyed, 2 in 5 overestimated their buying potential, and many dramatically underestimated the financial toll interest will have on their home’s cost over 30 years.

Buying a Home Is a Rite of Passage

Ryan Graves, CFA, Bemiston Asset Management, says, “For many Americans, buying a home is a rite of passage. Buying a home is much more difficult now, as interest rates and prices have surged in recent years.  Those who want to own a home must take more drastic measures than previous homeowners.  Downsizing apartments is a great way to save on monthly expenses and pocket extra cash.”

Possible Solutions

He continued, “Increasing your income is the best way to supercharge your downpayment savings, but it can be the most difficult. Knowing your worth and accomplishments is the surest way to ask for a raise confidently. If you don’t get a raise, you can better shop yourself on the job market. If getting a raise or a new job isn’t for you, there is a nearly limitless number of ways to find a side gig via apps like Uber or DoorDash or websites like UpWork.”
 
You can also take some drastic measures, “Living alone is getting insanely expensive, especially in booming job markets. Finding a roommate will let you at least halve your rent and utility expenses. The added benefit is that roommates expand your social network, which will come in handy when looking for a new job,” Graves says.
 
“If possible, move back home with your parents. More and more millennials are doing this as they save for a down payment. Swallowing your pride will help you save game-changing amounts of money on rent, utilities, and groceries.
 
As the total amount of down payments rises, it’s also becoming more important where you save your money. Stashing money in cash ensures you will always be behind the increasing prices of homes, but investing your growing pot of money will help you at least keep pace. “
 

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