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For as long as the American Dream has been around, homeownership was considered an intractable piece of the wealth-building puzzle. For many young people in the U.S. nowadays, however, just the idea of one day owning a home is a dream.
After speaking dourly about the housing market for years, young Americans are now changing their minds about what it means to succeed financially in this country. Nearly 90% of American adults under 40 say buying a home now is harder than it was for their parents, according to a Pew Research Center survey published last week.
Their skepticism is likely justified. The median U.S. home now sells for around $400,000, up more than 20% since 2019. Meanwhile, median household income has remained broadly flat over the same period, a dynamic that has primarily penalized younger prospective homebuyers. In 2019, 56% of renter households under 40 could afford the monthly cost of owning a home, according to Pew, a share that had dropped to just 37% by 2024.
That affordability squeeze is reshaping how young Americans think about homeownership itself. Only 24% of Americans under 40 call buying a home a very good investment decision, compared with 38% of adults 60 and older. Owning a home has long been considered part of financial freedom and the larger American Dream, but that concept itself has lost its sheen as a rising share of young Americans grow disillusioned with it.
Chasing a different dream
Another Pew survey, published in 2024, found Americans aged 18 to 29 were the least likely to say the American Dream was still possible, and the most likely to say it is now an unachievable ideal.
When it comes to housing, that sentiment is translating into behavior. A poll published in April by Gallup found just 25% of non-homeowners now expect to buy a home within five years—the lowest share since Gallup began asking the question in 2013. Among non-homeowners aged 18 to 34, only 29% expect to buy within five years, down from 53% just a decade ago, and the share who don’t expect to buy at all in the foreseeable future has more than doubled.
Young people have grown so convinced homeownership is not for them, it is impacting their relationship with money and upending long-standing personal finance norms.
As young Americans’ odds of ever owning a home decline, they begin to consume more relative to their wealth, work less, and take on riskier investments, according to a paper published last year by researchers at Northwestern University and the University of Chicago.
Homeownership is far from being top-of-mind for young Americans, the researchers found. Based on spending trends, the demographic cohort born in the 1990s will retire with a homeownership rate 9.6 percentage points lower than that of their parents’ generation. Compared to households with similar net worths who are also homeowners, people who have lost hope of homeownership tend to carry higher credit card bills, become less engaged with work, and are more likely to pursue volatile investments, including cryptocurrency.
The paper’s findings suggest that for many young Americans, the ideal of homeownership represents more than just a rite of passage. Households planning to buy a home usually need to save for a down payment, keep a good credit score, and pay off outstanding debt. Studies on the psychology of saving have found attaching tangible milestones to financial planning, such as a goal to buy a home, tend to instill better savings habits in young people.
The affordability crisis has turned the house-hunting experience into one of hopelessness for many Americans, particularly Gen Z, who increasingly resort to “doom spending” and financial nihilism. The alternative might be just as dire. With a rising share of new homebuyers overextending their budgets or accepting high mortgage rates just to close on a home, delinquencies are rising. The number of late mortgage payments more than 90 days past due rose 18.6% in December from a year earlier, according to a survey published earlier this year by VantageScore, a credit scoring agency—a faster increase than for delinquencies involving cars or credit card bills.
Young Americans might be granted a reprieve in their lifetime, as recent research from the Mortgage Bankers’ Association suggests the baby boomer generation will gradually drip out of the housing market in the decade or two, leaving behind an oversupply of homes for smaller young generations to snap up.
But the idea that housing prices will normalize within the next 20 years is likely to be of little reassurance to Americans who’ve already reached prime homebuying age, but remain stuck in rental units nonetheless. For them, housing as a good investment might only be a paper dream.
This story was originally featured on Fortune.com
