From
rising

home
prices
to
rising

mortgage
rates
and

inflation,
the

millennial
generation
hasn’t
had
it
easy
when
it
comes
to
homeownership.
But
new
data
from


Realtor.com
shows
that
millennials
aren’t
overly
burdened
in
comparison
to
previous
generations.

The
analysis
of
historic
home
prices,
income
levels
and
mortgage
rates
found
that

baby
boomers
—
Americans
between
the
ages
of
60
and
78
this
year
—
“arguably
faced
the
toughest
housing
market
ever
for
first-time
buyers.“
In
1980,
when
boomers
were
entering
their
prime
homebuying
years,
mortgage
rates

spiked
above
16%
and
the
average
monthly
home
loan
payment
jumped
34%
year
over
year.

“During
the
years
when
boomers
turned
30,
the
share
of
median
household
income
needed
to
make
the
typical
mortgage
payment
averaged
33.2%,
the
highest
of
any
living
generation,“
the
report
explained.
“In
contrast,
millennials
on
average
faced
the
lowest
mortgage
burdens,
thanks
to
a
decade
of
ultralow
interest
rates
following
the
Great
Recession.“

The
analysis
calculated
the
typical
mortgage
payment
as
a
share
of
median
income
by
using
the
average
30-year
fixed
rate
on
a
median-priced
existing
home.
It
assumed
a
10%
down
payment
and
did
not
factor
in

property
taxes
or
homeowners

insurance.

For
millennials
turning
30,
the
typical
mortgage
payment
has
averaged
only
22.5%
of
their
median
income.
That’s
lower
that
the
25.8%
share
for
Generation
X
(ages
44
to
59
in
2024)
and
the
22.6%
share
for
the
Silent
Generation
(ages
79
to
96
in
2024).

Realtor.com
noted
that
“reliable
mortgage
data“
only
dates
back
to
the
early
1970s,
which
covers
only
a
portion
of
the
first-time
homebuyer
experience
for
the
Silent
Generation.
And
the
youngest
millennials
(ages
28
to
43
this
year)
don’t
turn
30
until
2026,
so
there
is
time
for
this
trend
to
shift.

A
front-end
debt-to-income
(DTI)
ratio
of
28%
is
a
commonly
cited
ceiling
for
mortgage
affordability,
but
there
have
been
times
for
each
generation
when
DTIs
have
risen
above
30%,
as
they’ve
done
in
each
of
the
past
two
years.

Still,
these
ratios
were
far
higher
during
the
peak
years
of
the
boomer-led
housing
market
of
the
1980s.
The
analysis
found
that
the
highest
DTI
ratio
ever
recorded
was
53.69%
in
the
third
quarter
of
1981,
when
the
oldest
boomers
were
turning
35.

Ratios
dropped
steadily
over
the
next
30
years
before
ascending
again
over
the
past
decade.
For
millennials
entering
the
market
at
the
start
of
the

COVID-19
pandemic
in
2020,
the
average
DTI
ratio
was
20.25%.
Today,
it
is
33.42%.

“Though
today’s
housing
market
is
not
the
least
affordable
in
history,
it
is
the
least
affordable
in
40
years
and
suffers
from
low
inventory
levels,”
Hannah
Jones,
senior
economic
analyst
at
Realtor.com,
said
in
the
report.
“Buyers
in
today’s
market
face
high
prices,
high
mortgage
rates,
and
low
levels
of
affordable
inventory,
making
it
exceptionally
challenging
to
purchase
a
home
as
a
first-time
buyer.”

The
analysis
also
attempted
to
answer
the
question
of
why
more
millennials
haven’t
bought
homes
based
on
these
affordability
metrics.
It
noted
that
inflation-adjusted
home
prices
grew
18%
for
baby
boomers,
23%
for
Generation
X
and
14%
for
millennials
compared
to
the
prior
generation.

Data
from
the
Berkeley
Economic
Review
was
cited,
which
showed
that
45%
of
boomers
were
able
to
buy
their
first
home
between
the
ages
of
25
and
34.
But
as
of
2019,
only
37%
of
millennials
in
that
age
range
were
homeowners.

The
report
noted
that
while
boomers
did
not
get
saddled
with
the
same

student
loan
debt
burdens
as
millennials,
the
job
market
of
the
1980s
was
less
friendly
to
potential
first-time
homebuyers.

The
U.S.
unemployment
rate
peaked
at
10.8%
at
the
end
of
1982.
It
averaged
7%
from
1976
to
1994
(the
period
when
all
boomers
reached
the
age
of
30).
Millennials
and
Generation
X,
meanwhile,
have
seen
average
unemployment
rates
of
only
5.6%.

David
Clark,
a
retired
economics
professor
at
Marquette
University,
told
Realtor.com
that
the
housing
crash
of
the
late
2000s
and
the
post-recession
labor
market
took
a
toll
on
the
millennial
homeownership
rate.
Essentially,
fewer
millennials
bought
homes
because
there
was
much
less
certainty
that
prices
would
stabilize.

“They
got
to
their
30s
at
the
worst
time
possible
for
buying
a
home.
You’re
coming
out
of
the
Great
Recession,
and
you’ve
got
a
pretty
weak
labor
market
as
a
consequence,“
Clark
said.
“They’re
saddled
with
some
pretty
significant
college
debt.
And
finally,
this
was
not
a
smart
time
to
buy
a
home,
when
prices
were
going
down.”