Young people's confidence around homebuying is crushed. How some manage to make it work.

Many young people feel crushed when they think about their ability to buy a home, but it doesn’t mean they’re giving up on the dream.

The average age of first-time home buyers rose to an all-time high of 38 last year. In a market where Baby Boomers have the upper hand and ability to pay in cash, the share of first-time home buyers sank to an all-time low of 24%, according to the National Association of Realtors.

That reality has young people feeling jealous. More than six in 10 Gen Z and millennial non-homeowners said they’re envious of peers who have bought houses, according to a new BMO survey. Despite their desires, 61% of non-homeowners are less confident they will ever own than they were at the peak of the Covid-19 pandemic and over half said they feel they’ve missed their opportunity.

It’s little wonder why. Thanks to high mortgage rates and home prices, Americans today need to earn about 70% more than they did six years ago to comfortably afford a median-priced home, according to Realtor.com’s April 2025 Monthly Housing Market Trends Report. 

Paul Dilda, head of U.S. consumer strategy at BMO, said current economic and market uncertainty isn’t helping make the home-buying process less daunting. Relatively high interest rates, persistent inflation, and higher housing costs have created what he called a “perfect storm” of confusion for first-time buyers. 

“At other times it was perhaps easier. Lower inflation, lower housing costs, lower rates would have made it easier and maybe people just transitioned. They didn’t really need a plan because it wasn’t as complex and nuanced,” Dilda said.

But now, he said if you want to own a home, having a solid plan is more important than ever.

To buy a house at the national median list price of $431,250, realtor.com estimates a household needs to earn about $114,000 each year. It assumes a 30-year fixed mortgage, 20% down payment, and the buyer adhering to conventional wisdom that they should not spend more than 30% of their gross income on housing.

While some young people feel homeownership isn't in the cards for them, others are getting financial help from relatives to make that big purchase. And others are considering unconventional ways to defy the odds and make it happen including relocating, co-buying, and mortgaging their retirement.

How are young people who buy homes doing it?

AnnaKate Nottonson, 24, and Kaylynn St. Peters, 28, are among the current minority of people who bought a home in their early 20s. They both consider their purchase a “starter home.” 

Nottonson works in technology consulting and as a fitness trainer on the side but says her overall annual income is less than $100,000. Her family helped put her through college, but she purchased the house on her own this year. She bought a two-bedroom, two-bath home in North Carolina for $395,000 with a 3% down payment and a $10,000 grant from a loan officer. She paid between $7,000 and 10,000 in closing costs. 

“You’re not getting the best deal when you put 3% down. That’s just a fact,” Nottonson said. “But at the end of the day, when you crunch the numbers, you see that my mortgage payment, granted I had a roommate, is still lower than what I was paying in rent and it’s going towards me and this asset.” 

St. Peters bought a one-bedroom, one-bath home in Illinois for $120,000 in 2019. Her grandfather co-signed for the mortgage and helped her with the 20% down payment.  

She’s not alone. Of those BMO surveyed, 60% of Gen Z and 57% of millennials who purchased homes said they couldn’t have done it without family support.

“If I didn’t have my family, I think I would’ve just been clueless,” St. Peters said. “I could have easily had the mentality as the other Gen Z people like, ‘Well, I don’t have that money. It seems really intimidating. I have no business buying a house.’”

Other ways young people plan to achieve homeownership

Those without help from relatives are considering some creative alternative paths to purchasing a house, the report found. Some 57% of Gen Z and 54% of millennials say they would buy with friends or family.  

Gen Z is also thinking about mortgaging their retirement, with 45% of prospective buyers planning to pull from their 401(k)s for down payments. 

Young people are also willing to sacrifice on location and buy houses that aren’t move-in ready to achieve homeownership. More than six in 10 are open to buying fixer-uppers and more than half are willing to move to another state or even country to afford a home, the survey found. 

Another recent study by Evernest, a property management company, ranked Minnesota as the most desired state for young people buying property, with 50.8% of people under 35 owning a home there. 

Utah and West Virginia also ranked high on the list, offering the highest average income for young adults and the cheapest houses for sale, respectively. 

What is keeping young people from buying?

Home buying, however, isn’t for everyone. 

Some non-homeowners' attention may be focused elsewhere, the BMO survey found.  

Of those with children, 57% said they are prioritizing paying for education or childcare. At 54%, most millennials reported they see saving for retirement as more important. Half of Gen Z said they were more focused on saving for a car. 

Other young Americans are waiting for borrowing costs to go down. More than two-thirds of Gen Z and millennials are holding out for lower mortgage rates.

And although buying a starter home is a common way to achieve homeownership, 66% of Gen Z and 61% of millennial renters agree that buying one and upgrading to a larger house a few years later "makes no sense anymore," the BMO survey found. Instead, they want to buy a home they can stay in long-term.

Storms, wildfires, and floods also have some nervous about buying a home. The survey found 65% of Gen Z and 55% of millennials are worried about climate risk factors and say they will affect where they live.

And some may simply want to spend their money on other endeavors.

“Homeownership is such a big expense, and you have to really be clear on, ‘Am I doing this because it’s what I want? Or is this what I’ve been told?’ That’s the first suggestion,” said Jack Howard, head of money wellness at Ally Financial. “If you want to travel the world, home ownership might not be it.”