The decline in home ownership is hitting every age group, new data shows
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A common narrative suggests that the housing crisis is a young person’s problem, with Gen Z and millennials bearing the brunt of high prices.
However, new data from the Federal Reserve Bank of New York and the American Enterprise Institute Housing Center reveal a more disturbing fact: the decline in homeownership occurs at all age levels.
“The profile has changed since this young couple started life and focused on this industry that has been out of the market for a decade,” Douglas Elliman’s Jaclyn Bild told Fox News Digital on Wednesday. “Today’s first-time buyer is much busier than someone who bought their first home 20 years ago. They come with children, full-time jobs, sometimes elderly parents, and a vested interest in a temporary starter home. They want something to support the life they already have. The challenge is that prices have not caught up with reality.”
“Many first-time buyers come later, with stronger incomes and stronger jobs, but they also navigate a very high cost base. In fact, the biggest obstacle is the total cost of ownership. Buyers have lower prices, of course, but they also take into account monthly payments, taxes, and long-term management costs,” said Douglas Ellizen Founder of Digital Karate Karate. “That’s why the buyer profile has changed to reflect a more intentional, financially prepared buyer who approaches the process with a long-term mindset.”
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The main problem is not just high mortgage rates, which are currently close to historical norms, but the huge difference between what Americans take home and what homes are actually worth. Data from the American Enterprise Institute Housing Center, cited by Fortune, shows that in 2003, the median home price was 4.3 times the family income. In 2017, it was 5.1 times, but today it has increased almost 6 times.
A single-family home in a prime neighborhood in Houston, Texas, appears to have construction workers outside. (Getty Images)
Additionally, between 2000 and 2022, homeownership rates have fallen between 8% and 10% for every age group. In the “starter” group earning between $50,000 and $75,000 a year, only 25% own a home in 2022, compared to 70% to 80% of households making $175,000 and above.
“Buyers are making incredibly conscious trade-offs. Some choose to stay in the area for a long time and expand their current property rather than moving to a higher price area. Others adjust their expectations in terms of size, location or condition to be able to stay within the budget. There is also a time component. Some buyers are waiting for more clarification, while others are moving forward, hoping for a broader stability now requires greater stability. It is an important financial step, so all decisions are made deliberately and with many strategies,” explains Katzen.
“People feel like they have a real box, they walk around motionless because the numbers don’t work,” Bild commented. “We’re seeing a first home becoming a permanent home out of necessity… Many are staying down and building new homes on existing land, some are building extras for extra space or converting a garage into an extra bedroom to make it work – that’s putting more pressure on supply. We’re also seeing a record number of buyers getting family support to bridge the financial gap. We’re even seeing some families think they don’t have a place to live.”
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American Enterprise Institute Housing Center co-director Ed Pinto warned Fortune that the current trend is creating a permanent class of renters among those who are not yet wealthy.
“When purchasing power declines, fewer people are buying homes at 28 — but fewer are buying at 38 or 48. The result is a broader decline in homeownership. The less affluent are getting squeezed, and that trend is the same across all age groups,” Pinto said.
“As the number of first-time buyers shrinks across the board, families who don’t have one are being pushed out,” he continued. “As long as prices are low and incomes are rising by 3% a year, purchasing power is improving. But the gap is still so large that if nothing else changes, low- and middle-income families living on the sidelines could be locked out for years to come.”
The AEI study also identified a large shortage of property as part of the housing availability case, noting that the “bottleneck” is not a lack of interest in purchasing, but a lack of approved land for entry-level housing.
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Katzen acknowledged that limited supply is adding significantly to America’s housing crisis.
“One of the most constant challenges is the supply, especially for the types of home buyers who are looking for at the entry and rising levels. The limited inventory reduces the choice and keeps the prices high. In most cases, the problem is not in nature, but rather, its availability,” he said. “When the right product hits the market, it tends to move quickly because there are many buyers looking for the same type of home. From a broader perspective, increasing meaningful supply can have a significant impact on improving market accessibility.”
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