Housing has long been a sign of American prosperity. The act of purchasing a house is thought to be the American path to not only financial freedom but also a means of personal protection: a place of solitude that shields you from the shocks and unpredictability.
Not surprisingly, the baby boomer generation continues to hold most of the housing today. According to Santa Monica Daily Press, boomers own 38% of homes nationwide despite comprising just over 20% of the U.S. population (Leffler, 2024).
Not only that, but their share of housing wealth capture has remained constant, due to the large appreciation they have seen in their home values through the years.
Daniel Short, the VP of commercial real estate at BMO Bank, points to macroeconomic factors being a large part in determining long term house prices. “Without a doubt, I think rate cuts are going to drive up home prices,” Short said.
Due to most millennials and first time buyers using debt to finance their homes, higher interest rates also drive up the expense of owning a home. This puts millennials in a lose-lose situation in the long term. Perfectly explaining why nearly 78% of Gen Z and 54% of millennials used help for down payment, especially from parents (Mreport, 2023).
Jordan Davis shares his experience with the housing market as a millennial. “I think I read in an article somewhere that 31% of millennials are still living with their parents,” Davis said. “If house prices keep increasing, I think that number will only increase. How are people going to be independent and resourceful if they are forced to live with their parents?” Davis questioned.
For now, it seems millennials will have to fight for their spot in the home ownership market.
By: Sid Singh, Adlai E Stevenson High School, Sophomore
Work cited:
Jordan Davis, millennial
Daniel Short, VP Commercial real estate BMO Harris