Over half of millennials now own a home
Millennials hit a major homeownership milestone in 2022, but they’re more likely to own a home in the Midwest versus pricey cities on the coasts.
Key points:
- 51.5% of millennials own a home nationally, U.S. Census data reveals.
- Saving for a down payment remains the largest hurdle to homeownership for most millennials.
- Millennials are more likely to own a home in Midwest cities versus expensive cities in California or New York.
While millennials overtook baby boomers as the country's largest generational cohort three years ago, they have not been able to build as much wealth as their boomer parents. And despite approaching their early 40s, millennials have also fallen far behind boomers and Gen Xers in homeownership rates.
However, there has been steady growth in homeownership. In 2022, millennials hit a significant milestone: half (51.5%) now own a home, according to a new report from Apartment List based on U.S. Census Bureau data, making them an important potential client base for agents.
Still, they haven't approached the homeownership rates of their older peers. Despite millennials crossing the 50% ownership threshold last year, Gen X neared 70% while nearly 78% of baby boomers own a home.
Why millennials still struggle to buy a home
Millennials haven't always been dealt the best hand when it comes to economic prospects. Many started their career during the Great Recession. Then they had to contend with mass layoffs and economic uncertainty during the pandemic years. While many are approaching their highest earning potential, homeownership remains out of reach. Blame the steep cost of living in most major cities and the large cash reserves needed for a down payment.
According to the Apartment List report, the majority of millennials surveyed said a down payment was the biggest obstacle to buying a home. Only 15% had over $10,000 saved for a down payment, 18% less than $10,000, and 67% had no savings.
It's a bleak outlook for millennials who hope to buy in the coming years. Homeownership feels so out of reach that more than half of millennials say they need to win the lottery to make a down payment on a home, a Zillow survey found.
Where millennials are most likely to own a home
Perhaps unsurprisingly, the cities with the highest percentage of millennial homeowners are located throughout the Midwest and Rust Belt. In Grand Rapids, Michigan, 63% of millennials own their home. Minneapolis, Cincinnati, St. Louis, Indianapolis, and Detroit follow with homeownership rates greater than 50%.
The cities where millennials are least likely to own a home are on the coasts: Los Angeles, San Jose, San Francisco, San Diego, and New York. All have homeownership rates lower than 35%.
Homeownership is especially unattainable in the City of Angels, where only 27% of millennials own a home. According to the latest market data from Realtor.com, the median sale price in Los Angeles is $965,000. So buyers would need nearly $200,000 cash on-hand for a 20% down payment on the typical home.
Prospects for millennial buyers (and their agents) appear to have more upside in the more affordable midwestern states. In Minneapolis, the median sale price is $305,000, while in much larger Chicago, the median home price is just $330,000. A buyer would need just over $60,000 saved for a down payment on a home in this price range, making the prospect of homeownership — and the American Dream — much more attainable.