Is avocado toast really keeping millennials from buying homes? Baby boomers seem to think so. A study reveals a generational divide in perceptions of homeownership. While 57% of boomers believe younger generations could afford homes if they tried harder, the reality paints a different picture.1
Sky-high home prices, crushing student debt, and stagnant wages have created a perfect storm for aspiring homeowners. But is it fair to blame an entire generation for their financial struggles?
The Boomer Perspective: Just Work Harder
Baby boomers, born between 1946 and 1964, have some strong opinions about why younger generations struggle to buy homes. According to the Clever Real Estate study, a whopping 71% of boomers believe millennials and Gen Z prioritize frivolous spending over saving for a down payment.
Travel, luxury items, and that infamous avocado toast are apparently draining young people’s bank accounts.But is this criticism justified? While it’s easy to point fingers at perceived irresponsible spending, the numbers tell a different story.
Millennials and Gen X actually hold about 87% of the country’s $1.63 trillion in student loan debt. (ref)
The Millennial Reality of a Changed Landscape
The housing market today looks vastly different from when most boomers bought their first homes. Consider these contrasts:
- 64% of older Americans paid $100,000 or less for their first home
- Only 11% of boomers made more than $75,000 annually when purchasing their first home
- Today, homebuyers need an annual income of $120,000 to afford the national average home price of $412,300
The gap between home prices and income has reached an all-time high, not seen since the 1970s. While some boomers faced high mortgage rates in the past, their wages typically increased at a similar pace.
In contrast, national home prices grew 43% from 2019 to 2022, but incomes rose only 7%. (ref)
Boomers’ Role in the Housing Crunch
It’s not all on millennials, though. Baby boomers, who account for 38% of homeowners, may be inadvertently contributing to the housing shortage:
- 54% of boomer homeowners never plan to sell their homes
- Only 15% intend to sell in the next five years
- Boomers own nearly 28% of the country’s large homes
This “aging in place” trend limits available inventory for first-time buyers, particularly in desirable neighborhoods. Additionally, when boomers do sell, they often have the advantage of making all-cash offers on new purchases, driving up prices in bidding wars.
Finding Common Ground
While it’s tempting to blame one generation or the other, the truth is that both sides face challenges in today’s housing market. Boomers struggle to offload large homes, while younger buyers grapple with affordability issues.
Instead of pointing fingers, perhaps it’s time to focus on solutions:
- Encourage downsizing: Incentivize older homeowners to sell larger homes, freeing up inventory for families.
- Address student debt: Implement policies to alleviate the burden of student loans on young buyers.
- Promote financial literacy: Educate all generations on smart saving and investing strategies.
- Increase housing supply: Support initiatives to build more affordable housing options.
By working together and understanding each other’s perspectives, we might just find a way to make homeownership attainable for all generations.
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Lack of inventory is the main culprit behind the affordable housing crisis. The reasons behind this are complex, including a construction worker shortage. But another factor is at play: Older Americans are staying in their homes longer and buying more homes than ever.
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Davin is a jack-of-all-trades but has professional training and experience in various home and garden subjects. He leans on other experts when needed and edits and fact-checks all articles.