The Locked-Out Generation: Why Millennials and Gen Z Can’t Buy Homes

In 1991, the median first-time homebuyer in the U.S. was just 28 years old—typically at the start of their career, ready to settle down, and optimistic about building wealth through homeownership. Fast forward to 2024, and that number has skyrocketed to 38. Today’s first-time homebuyer has been out of high school for two decades but is only 24 years away from being eligible for Social Security benefits.

Locked-Out Generation

What happened? Student debt, high rents, and soaring home prices have created an impossible scenario for younger generations. Millennials and Gen Z are stuck in an economic escape room, where the only way out is to inherit property from their parents—except their parents may have just taken out a reverse mortgage to fund their retirement.

This isn’t just a cyclical shift; it’s a structural transformation in the housing market, making homeownership a distant dream for many. And as young buyers struggle to break in, the pressure is mounting elsewhere: rents are surging, affordability is collapsing, and the very definition of the American middle class is being rewritten.

The Barriers to Homeownership

Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), highlights the stark reality: “Today’s young adults continue to face delays in homeownership compared to past generations at the same age. Not only is the homeownership rate lower for those under 35 today, but the first-time buyer share is lower, and the age of first-time buyers is older than seen historically.”

The data tells the story:

• First-time homebuyers now make up just 24% of all buyers, a sharp decline from the historical average of 40%.

• Home prices are rising in 90% of metro areas, outpacing wage growth.

• 49% of potential first-time buyers cite high rent as their biggest obstacle to saving for a down payment.

• 40% of first-time buyers say student loan debt has delayed their ability to purchase a home.

For Millennials and Gen Z, buying a home means making massive financial sacrifices—if they can even afford it at all.

The Rental Squeeze: Prices Keep Climbing

With homeownership increasingly out of reach, demand for rental housing has surged, especially in major metro areas and booming secondary markets. This increased demand is pushing rents higher and higher.

According to Realtor.com, the median rent in the U.S. is now over $2,000 per month, a 20% increase since the pandemic. Some cities have seen even sharper spikes, with places like Miami, Austin, and Phoenix experiencing 30-50% rent growth in just a few years.

Meanwhile, institutional investors—who know that younger buyers are locked out—are capitalizing on the trend. In 2023, nearly 27% of single-family home purchases were made by investors, not individual buyers (CoreLogic). Many of these homes are being turned into rentals, further reducing the supply of starter homes and driving up costs.

Where Are Young Buyers Going?

Priced out of major markets, younger buyers are turning to alternative locations. Small towns and secondary cities have seen an influx of remote workers and priced-out Millennials fleeing expensive coastal metros.

Hamilton Lombard, a demographer at the University of Virginia, explains: “Remote work and a tight labor market are continuing to allow many workers to have far more geographic flexibility in where they live.”

The result? Between 2010 and 2013, only 27% of rural and small metro counties saw an increase in 25- to 44-year-olds. By 2024, that number had jumped to 63%.

The Big Picture: Are We Becoming a Renter Nation?

The long-term consequences of this generational lockout are profound. Homeownership has historically been the primary way Americans build wealth. Without it, Millennials and Gen Z face a much steeper climb toward financial security.

At the same time, rising rents are making it even harder to save for a home. The more people are forced to rent, the tougher it becomes to break out of the cycle. Meanwhile, institutional investors continue to profit, snapping up homes and transforming them into long-term rental properties.

“If mortgage rates remain high and home prices keep climbing, we could see an entire generation stuck renting indefinitely,” warns Lautz.

For now, the message to younger buyers is clear: homeownership isn’t dead, but it’s on life support. Until affordability improves, rents will keep rising, investors will keep expanding their portfolios, and first-time buyers will continue to be locked out—left wondering if they’ll ever get a chance to own a piece of the American Dream.

If you're considering buying or selling real estate in Chaffee County, I invite you to reach out for personalized assistance. Known for its stunning landscapes and vibrant communities, Chaffee County presents a unique real estate market. Whether you're seeking a mountain cabin, family home, or investment property, having an experienced professional can make a significant difference. I provide expert insights into local trends, help you understand property values, and guide you through the buying or selling process. My goal is to ensure you make informed decisions that align with your aspirations.

Contact me at Shawn@FirstColorado.com to discuss your real estate goals. Together, we can explore options and create a strategy that suits your needs.