Young homebuyers shut out of market in 2022

Pandemic relief and historically low mortgage rates helped millions of millennials buy homes for the first time between 2019 and 2021. But that tide abruptly turned this year. Rising prices, decreasing inventory and high mortgage rates shut out younger buyers.

By mid-2022, the share of homes purchased by first-time buyers plummeted from 34% to 26%, the lowest level in at least four decades. According to a survey from the National Association of Realtors, the median age of homebuyers shot up from 45 to 53, the oldest since the organization started collecting data in 1981.

Millennials have always lagged behind other generations in homeownership. They started their careers in the shadow of the Great Recession, and lower earnings, high student debt and reduced wealth have followed them ever since.

There is little respite in sight for those hoping to buy their first home. The housing market is cooling, but mortgage rates are expected to remain high as the Federal Reserve raises interest rates. And the high costs of rent, food and other necessities make it more difficult to save for a down payment.

“Anybody who already owned a house did very well,” said Gray Kimbrough, an economist at American University. “The problem is, if you go from renting to buying in a really expensive market, you don’t have the advantage of all the equity other people built up by happening to own a house in a market that got a lot more expensive.”

— THE WASHINGTON POST