In 2022, millennials (aged 27-42) finally became a homeowning generation at the average age of 34, with 52% of them taking the step, according to a new report from RentCafe.
RentCafe’s new report we analyzed IPUMS data for the nation’s 110 largest metros (with populations of 500,000 or more) to get a clearer view of generational trends in homeownership and renting across the country. The report found that in more than a quarter of these metros, the number of millennial homeowners increased by a whopping 64% between 2017 and 2022 to 18.2 million.
Key highlights:
- Millennial home ownership jumped by 90% in New York in the past five years, but rose by just 47% in Los Angeles.
- Richmond is another favored location for millennial homebuyers, tripling in the last five years. The area’s funky, hipster reputation and cost of living below the state and national averages were two of the main reasons that drew in millennials looking to buy a home.
- Cleveland, Raleigh, San Jose, and San Diego were the cities with the highest increases in the number of millennial renters between 2017 and 2022—85% for the first two, and close to 50% for San Jose and San Diego.
- Baby Boomers (aged 59-77) are the largest group of homeowners with 32.1 million households, compared to 9.1 million who rent. They also became a homeowning majority sooner than millennials, at an average age of 33.
- In the last five years, however, Baby Boomers saw a decline of 354,000 homeowners and 920,000 renters.
- Gen Xers (aged 43-58) reached the milestone even earlier in life, at an average age of 32. They are the second most numerous homeowning generation, with a total of 24.4 million owner households, after adding only 1.9 million new owner households in the last five years.
- In the last five years, only Gen Z (aged under 26) saw a homeownership increase of 455% to 1.6 million. Meanwhile, the number of Gen Z renters quadrupled to a total of 5.6 million.
- Gen Z is the only generation to see an increase in both the number of renters and the number of homeowners as they entered the workforce. They are also the only renter majority generation.
- In addition, Los Angeles is actually the preferred rental location for Gen Z renters, increasing by 82%.
Major takeaway:
Millennials were able to get ahead of Boomers in the market for a few reasons, according to Alexandra Both, a senior creative writer at RentCafe and author of the report.
“Millennials, who are now in their prime homebuying years, had several economic factors working to their benefit in the last few years, which helped make their picket fence dreams come true,” said Both. “First, Gen Y reached a historically high median income in 2022: $108,000 per year, up 44% compared to five years earlier. This was the most significant income increase among all generations. Gen Z came in next with a 33% rise in median income, followed by Gen X with 25%. Boomers saw an 8% jump.
“Second, many moved back in with their parents during the pandemic or delayed moving out entirely. With work-from-home supporting these decisions, many millennials saw this period as an opportunity to save for a down payment. As a bonus, 59% of millennial homebuyers also received financial support from their parents for their mortgage down payment, according to a LendingTree survey,” continued Both. “At the same time, the median home price in the U.S. has been on a steady steep climb ever since the lockdown, going from $322,600 in the spring of 2020 to $454,900 in the summer of 2022, according to the Federal Reserve Bank of St. Louis. However, this didn’t slow the housing market as anticipated.”
Concluded Both, “In 2020, the number of millennial owners increased by 12.6% compared to 2019. In addition, despite the record-breaking home prices during the pandemic, the number of millennial homebuyers rose by almost 30% between 2019 and 2022. Only Zoomers had a more impressive rise in homeownership in the last three years (157%), but this is to be expected as this cohort is now coming of age and establishing itself in the job market.”
For the full report, click here.
