How Young Adults’ Homeownership Differs Across Generations

St. Louis Fed economist Victoria Gregory discusses what has and hasn’t changed regarding income, homeownership rates and, ultimately, where people decided to live in the U.S. across four different generations.

Many factors affect young adults’ decisions about homeownership and where to live. How have their decision patterns changed over time?

In a June 2024 Timely Topics Podcast episode, St. Louis Fed economist Victoria Gregory discussed her research examining the income, homeownership rates and location patterns of people in their 20s and 30s across the four generations from baby boomers to Gen Z.

So what trends have emerged?

Gregory explained that income remained relatively stable for young adults across the generations, but that homeownership rates had fallen.

“I found that newer generations were less likely to own homes at similar ages compared to older generations, and that was true regardless of whether or not one had a college degree,” she said. “So, it seemed like, interestingly, even though college [degreed] workers were earning similar amounts to previous generations, they were still less likely to own homes.”

What is causing this homeownership gap?

Gregory said that there are a number of factors that may be affecting homeownership rates, including higher rates of debt, including student loans, among recent generations.

“At age 30, it turns out median wealth was not super different across the generations,” she said. “But when you dive into that, it seemed like Gen X and millennials in particular held much more debt than their predecessors. And debt holdings were also particularly driven by student loans.”

She added that lower homeownership rates likely affect other behaviors, including marriage and fertility patterns, which may explain why recent cohorts tend to marry later and are less likely to have children.

When looking at where each generation tended to reside in their 20s, Gregory found that about half of baby boomers lived in large cities, compared with about 40% of Gen Zers. Many members of the more recent generations seem to have chosen to begin their working lives in smaller areas, she said. By their 30s, the shares of baby boomers, Gen Xers and millennials living in large cities, suburbs and smaller areas were more similar, she added.

Gregory said she is interested to see the future choices made by Gen Z, whose oldest members are in their early 20s, and how those choices fit into wealth, location and homeownership patterns.

The economic downturn during the COVID-19 pandemic may have a negative impact on the generation’s future outcomes, she pointed out, and it’s unclear how remote learning and work, which breaks the link between where a person lives and where a person’s job is, will affect the generation in the long term.

“It seems like they’re going to be the first cohort to have these more flexible living and working arrangements available to them throughout their entire life,” she said. “So I think it’ll be interesting to see how that plays out for them.”

For more on Gregory’s thoughts and research, listen to the episode.

A transcript of the podcast episode is available at Across Generations: Income, Homeownership and Where People Live.