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Spend enough time on social media, and you’ll see some variant of the meme: a video of older people line dancing or partying to a rap song, with a caption like, “Boomers after finding out the home they bought in 1973 for two pennies and a handshake is valued at $3 million” or “Boomers selling their homes for $2 million after buying them in 1969 for 7 raspberries.”
There is a clear sense that, as with issues like the climate or our aging Washington political class, boomers mucked everything up and left millennials with a uniquely grim reality.
However, according to a recent analysis of historic economic data from Realtor.com, that’s not quite the case when it comes to buying a house. The boomers had it even worse.
During the years when boomers first entered the housing market, from about 1975 to 1994, the share of a median household income needed to make a typical mortgage payment was about 33 per cent, the highest of any living generation, whereas millennials typically faced a mortgage burden about 10 per cent less.
Things were even worse during peak years of economic turmoil.
Amid the 1981 recession, typical mortgage payments as a share of median household income neared 54 per cent, about 20 per cent higher than the next-biggest spike, in 2023.
And boomers also faced the greatest unemployment rate in recent history, 10.8 per cent in 1982, if you exclude the Covid pandemic.
Still, just because one generation had it worse in some respects, it doesn’t mean millennials have it easy, according to Realtor.com senior economic analyst Hannah Jones.
“It is definitely the hardest time to buy in the last 40 years, but it is not the hardest time to buy ever,” she told The Independent.
Other signs point to unique difficulties for millennials.
The median age for a first-time home-buyer has risen from 29 in 1981 to 35 in 2023, according to the National Association of Realtors.
The delay in buying a first home was certainly influenced by the Great Recession, as home prices fell annually between 2007 and 2012, according to the Case-Schiller Home Price Index. If prices are falling, there’s not a great incentive to plow your equity into a home.
After the recession and its wave of defaults, developers still aren’t building enough homes to match the speed of new household formations, Jones added.
Combine that with low vacancy rates during the pandemic, and millennials face a uniquely tight housing squeeze.
“There are just less homes available,” she said, adding: “The last time it was even close to his challenging was before most [millennials] were born.”
Beyond the housing supply, millennials are also confronting unique economic challenges that make it harder to buy new homes.
On average, millennial homebuyers have more debt and a lower net worth than their parents had at the same stage. When it comes to education, older millennials hold about 40 per cent of the total outstanding student loan debt in the country.
As a result, the median home can remain painfully out of reach.
As of mid-2023, median homes sold for about $400,000. At that time, boomers had an average net worth of $1.8m, compared to an average millennial household net worth of around $200,000, according to a Bank of America analysis of Federal Reserve data.
The pandemic further amplified these dynamics, as home prices increased by nearly 50 per cent between March 2020 and March 2024, and mortgage rates have risen to multi-decade highs.
“We face a very significant housing supply shortfall that has been building for a long time,” Treasury Secretary Janet Yellen said in a speech in June. “This supply crunch has led to an affordability crunch.”
Home prices are so high, in fact, that, somewhat counterintuitively, many boomers are now in a situation where they have no economic incentive to sell.
A majority of boomers own their homes outright, and those who don’t have lower locked-in mortgage rates. Selling now would mean facing a market of high prices and high mortgage rates, neither of which are that attractive.
"You don’t want to be economically stupid. If my house is worth even $650,000, I don’t want to spend $1.1 million to downsize substantially, knowing that on top of that, I’m probably going to have to pay some [homeowner association] fees," Sherry Murray, 73, who’s considering downsizing from a four-bedroom Pittsburgh home, recently told NPR.
And even if they did sell, millennials would have a tough time snapping up these larger family-sized dwellings.
“Boomers love their homes. Even if they did want to sell, it is now prohibitively expensive for many millennials,” Sheharyar Bokhari, senior economist at Redfin, recently told CNN.
The bottom line, then, is that despite all of their generational conflict, millennials and boomers might be able to agree on one thing: it can be awfully difficult to buy your first home in America.
And they can both agree that they’re better off than renters in this country. There’s not a single state or county in America where a renter working full-time at minimum wage can afford a two-bedroom apartment, according to the National Low Income Housing Coalition.
