Published by Forbes.com | April 9, 2025
In this economy, with high uncertainty and recession risk, it's hard to blame them.
New economic data show an unprecedented number of young adults are forgoing homeownership in favor of renting: From 2012 to 2023, affordability worsened, yet young adults who could buy continued to do so. But not anymore. Now young adults are remaining renters, not just because of affordability, but because flexibility makes them more resilient to economic downturns. This shift could usher in a new phase in the economy where the precarity of the labor market compels Americans—especially younger Americans—to make short-term choices that jeopardize their long-term financial security.
The implications of these trends are bigger than just housing markets. The American dream is part of our American identity and part of our tax code. The U.S. tax code assumes a universal interest in homeownership, and it transfers wealth from renters to the homeowner class. If the U.S. is to be a place where ownership is not a shared goal, the effects on inequality will be stark and will exacerbate problems already in place.
First-Time Home Buyers Are Older Than Ever—And Less Common
Buying a home used to be a rite of passage for young, middle class, adults. From the 1980s through the 2010s, the median first-time home buyer was someone in their early 30s or even late 20s. But those kinds of young, first-time buyers have become increasingly rare, according to research from the National Association of Realtors. In 2024, the median age of the first-time home buyer reached a record high of 38, the oldest age dating back to 1981. Meanwhile, the share of first-time buyers (of all ages) has plummeted to a historic low of 24%, well below the historical average of 38%. This has resulted in a stagnated homeownership rate for young adults—just 33% of 27-year-olds owned their home in 2024, notes a Redfin report, compared to 40% of baby boomers when they were 27.
In some ways, this is the same old story of an unfair economy where the rungs on the ladder to success keep getting farther apart, keeping those with wealth securely at the top while others struggle to climb. For years, existing homeowners have benefited from rising home values, and many now enjoy cheap mortgages with record-low mortgage rates, too. Meanwhile, first-time home buyers face high home prices and high mortgage rates. But in 2024, housing affordability didn’t worsen; it improved slightly with the median mortgage payment growing slower than median income, according to Redfin’s analysis. Currently, the supply of homes is increasing, giving buyers more homes to choose from and, consequently, more power to negotiate lower prices. Despite all these improvements to the housing landscape, young adults are shunning home buying and remaining renters.
