High costs and debt prevent young Americans from entering the housing market
The path to homeownership remains out of reach for most young Americans in the nation’s largest metro areas, with less than 5% of mortgage holders under 30, according to a new LendingTree study.
The analysis, based on anonymized credit reports, found that just 3.1% of Americans under 30 currently have a mortgage in the 50 largest US metros. However, the share varied by location, ranging from a high of 9.4% in Nashville to a low of 0.8% in San Jose.
While homeownership among those under 30 remains low across the board, some cities offer better opportunities than others. Nashville, Indianapolis (8.4%), and Pittsburgh (7.0%) have the highest share of young mortgage holders, while expensive coastal metros such as San Jose (0.8%), New York (1.2%), and Los Angeles (1.3%) have the lowest.
The gap is even more striking when looking at mortgage holders overall. People under 30 represent just 4.7% of all mortgage borrowers in the largest metros, despite making up 20.3% of the adult population. Indianapolis leads the way with 10.2% of mortgage holders under 30, followed by Salt Lake City (9.4%) and Cincinnati (8.9%). At the other end of the spectrum, young mortgage holders make up just 2.2% in New Orleans and Boston.
Even among young people who do manage to secure a mortgage, their purchasing power remains far below that of older buyers. On average, buyers under 30 seek homes valued at $92,332 - a staggering 74.9% lower than the $367,681 sought by older buyers.
This price gap is particularly pronounced in Providence, RI, where younger buyers look at homes 88% cheaper than those of older buyers. Charlotte (86.1%) and San Francisco (84.1%) follow closely behind. However, in cities like Buffalo (58.0% cheaper) and Milwaukee (58.5% cheaper), the disparity is smaller, suggesting slightly more accessible markets for younger buyers.
The financial challenges facing young buyers extend beyond home prices. Americans aged 18 to 29 hold $527 billion in mortgage debt, making up just 4.2% of total mortgage debt. Notably, mortgages account for 44.6% of all debt for this age group, compared to 68.6% for those in their 30s.
LendingTree chief credit analyst Matt Schulz said high home prices and elevated interest rates are forcing many young adults to delay homeownership.
"Rising home prices and consistently high interest rates, combined with stubborn overall inflation, have made homeownership little more than a pipe dream for many Americans," Schulz said in the report. "That’s especially true for 20-somethings, who may also be struggling with relatively new student loan debt.
“It’s nothing short of a shame."
The challenge is particularly severe in the nation’s largest cities. While urban areas offer higher wages, the combination of skyrocketing housing costs and commuting expenses often erodes any financial advantage.
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"Big-metro dwellers may have higher incomes than their rural or suburban counterparts, but the cost-of-living and cost of housing can be so astronomically high that it eats up all that extra income - and then some," Schulz noted.
“Also, if you’re able to find a home you can afford to buy, it may be so far from your workplace that you spend large amounts of money commuting. It all adds up to a challenging situation leading many young people to forgo homeownership altogether.”
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