Baby boomers dominate home ownership, leaving little for Gen Z (2024)

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Baby boomers dominate home ownership, leaving little for Gen Z (1)byThomas Leffler

Baby boomers dominate home ownership, leaving little for Gen Z (2)

For youth wanting to strike out on their own with real estate, the Los Angeles metro area may not be the best option, according to recent data. Reports have shown that buying a home has grown increasingly difficult for Generation Z, those aged 25 and younger, due to negative economic factors like inflation and high mortgage rates.

According to Point 2 Homes, recent Census data shows that the percentage of Generation Z householders that actually own their own home is less than 17%, despite making up 21% of the United States population.

In Point 2 Homes’ analysis of 100 major U.S. cities, Generation Z homeownership feasibility was ranked on several metrics, such as inventory of housing options, median sale price of homes as of 2023, and a home price-to-income ratio that depicts how many household incomes of those 25 and younger would be needed to reach median home price in a market. Out of the 100, Los Angeles was ranked sixth-toughest, with a home price-to-income ratio of 22.1. This means that the median Los Angeles home price is over 22 times the average Generation Z income. For Los Angeles, just 5.6% of homeowners were determined to be in the group.

The city joins several California contemporaries on the list, with Fremont (#1), San Diego (#2), San Jose (#4), Riverside (#5), Sacramento (#7) and Chula Vista (#8) also proving incredibly difficult for aspiring younger homeowners.

Baby boomers dominate home ownership, leaving little for Gen Z (3)

Part of the issue is home inventory being taken up by the Baby Boomer generation (those born from 1946-1964), which also impacts millennials and Generation X residents. A report by Construction Coverage covering U.S. locations with the most baby boomer-dominant housing markets showed that the generation accounts for 39% of homeowners in the Los Angeles-Long Beach-Anaheim metro area. This is the sixth-most dominated housing market among all large U.S. metro areas, with 39% homeowners in the age range despite making up 18.9% of the metro’s population.

Other California metros are susceptible to this issue, with 46% of homes in the Santa Maria-Santa Barbara area owned by baby boomers, along with the generation owning 42.4% of homes in Oxnard-Thousand Oaks-Ventura. The trend is national, according to the Construction Coverage data, with boomers owning 38% of homes nationwide despite comprising just over 20% of the U.S. population.

The share of homeowners in this age range has been steadily increasing, according to Census data, and these homeowners are planning to keep their inventory off of the market. A 2021 survey conducted by AARP stated that 77% of U.S. residents over the age of 50 would prefer to remain in their current home over moving in with family, moving to a nursing home or moving to an assisted living facility.

Another hindrance for Generation Z is living costs, with a 2023 survey from Bank America stating that 53% of the generation cites high cost of living as a barrier to financial success, and that 73% have changed spending habits recently. Similarly, a Deloitte survey released in 2023 saw 51% of 14,500 Generation Z members surveyed living paycheck to paycheck.

thomas@smdp.com

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Baby boomers dominate home ownership, leaving little for Gen Z (4)

Thomas Leffler has a Bachelor of Arts degree in Broadcast Journalism from Penn State University and has been in the industry since 2015. Prior to working at SMDP, he was a writer for AccuWeather and managed...More by Thomas Leffler

Baby boomers dominate home ownership, leaving little for Gen Z (2024)

FAQs

Baby boomers dominate home ownership, leaving little for Gen Z? ›

As of 2022, a whopping 79% of baby boomers owned the homes they lived in, compared with 52% of millennials and more than 26% of adult Gen Zers, per a Redfin analysis of Census data.

Why aren t boomers downsizing? ›

The Boomers' Big Home Advantage

High interest rates, steep prices, and tight inventory levels make it a less than ideal time to sell and buy something smaller. Many boomers find it more economical to stay put rather than compete with younger buyers for smaller homes priced similarly to their current residences.

Why won't Gen Z be able to buy a house? ›

Despite Increasing Salaries, Gen Z and Millennials Can't Afford Houses. “This is a resilient response to the very dramatic increase in rental burden. The average proportion of a person's income that goes to rent was 25% in 2000, and it's now 40%. That's really a striking increase,” Wachter said.

What generation owns the most houses? ›

This is in part because of a growing trend in which baby boomers, the generation that owns the largest share of American homes, are planning to stay put.

Why are baby boomers the wealthiest generation? ›

“The baby boom generation has started to retire with a record $76 [trillion] in net worth,” Yardeni writes. “They are spending on restaurants, cruises, traveling, and healthcare. All these services industries have been expanding their payrolls, thus boosting real incomes, and fueling more spending.”

Why aren't boomers moving out of big homes? ›

Across the country, many baby boomers are facing their own version of this calculus: It can be cheaper — and more appealing — to stay in their current, large house, than to sell it and move to something smaller. This doesn't only affect younger buyers.

What will happen when all the baby boomers retire? ›

The retirement of experienced Baby Boomers will create a talent gap and brain drain in the U.S. labor market, as their in-depth, 30-plus years of industry knowledge will go out the door with them. As senior professionals leave the workforce, it could lead to a shortage of workers.

Why won t millennials be able to afford houses? ›

Key Takeaways. Millennials are not buying homes as readily as the previous generation. Delaying marriage and having children is keeping many Millennials at home with their parents. Tighter lending criteria can also make homeownership unaffordable or virtually impossible for those without much credit history.

Why is Gen Z giving up? ›

At the core of both quiet quitting and resenteeism are common themes: burnout, feeling undervalued, and feeling unfulfilled.

Why is Gen Z struggling financially? ›

Gen Zers face greater obstacles to financial success

Not only are their wages lower than their parents' earnings when they were in their 20s and 30s, but they are also carrying larger student loan balances.

What is the richest generation of all time? ›

Millennials stand to become the richest generation in history, after $90 trillion wealth transfer | CNN Business.

What generation will inherit the most money? ›

By Knight Frank's estimation, this shift will make affluent millennials “the richest generation in history.” Previous reports show this figure at a lower $84 trillion, but nonetheless confirm a shake-up in the foundations of spending power across the globe.

What generation made the most millionaires? ›

Baby boomers have the highest household net worth of any US generation. Defined by the Federal Reserve as being born between 1946 and 1964 (currently in the ages between 59 and 77), baby boomers are in often in the sunset of their career or early into retirement.

Which generation has the least wealth? ›

According to the study, the average millennial has 30% less wealth at the age of 35 than baby boomers did at the same age. Yet the top 10% of millennials have 20% more wealth than the top baby boomers at the same age.

What is the average income of a baby boomer? ›

Economist Kevin Drum looked at inflation-adjusted household income for baby boomers and millennials as of 2021. He found that the average 40-year-old millennial had an income of $49,000, higher than what the average baby boomer earned when they were 40 ($39,000). And yet, millennials were — and are — struggling.

How rich is the average Boomer? ›

According to Fortune magazine, the average baby boomer's net worth falls between $970,000 and $1.2 million. When this population group retires or passes, their collected wealth will most likely be transferred to their children or grandchildren.

Why are boomers not retiring? ›

Peak boomers, the last and largest group of baby boomers who will start turning 65 this year, have been impacted by income and wealth inequality. The best prepared for retirement are those who are White, male and college educated, according to median retirement savings.

Why are baby boomers so resistant to change? ›

Fear of the unknown: Baby boomers may feel uncomfortable with new technologies or social norms that challenge their worldview and way of life. Resistance to criticism: Baby boomers may feel that they have already achieved a certain level of success and do not want to be criticized or challenged by others.

Why is the baby boomer generation so large? ›

The roots of the baby boom lie in the universal rush to early marriage and favorable economic climate for the relatively scarce young men born of the Depression cohort. The impact of the boom interrupted a century-long fertility decline.

Will millennials inherit boomer wealth? ›

“It has started and it's only going to accelerate,” said Liz Koehler, head of advisor engagement for BlackRock's wealth advisory business. Baby boomers are set to pass more than $68 trillion on to their children. And yet, some millennials and Generation Z may not be inheriting as much as they think.

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