Only 1 in 3 millennials under the age of 35 own a home in 2018, according to the US Census Bureau. A recent study by the Urban Institutes’ Housing Finance Policy Centre showed that this number is 8 or 9 percentage points lower than previous generations’ homeownership rates at age 25–34. Is this merely a coincidence or is there a more serious underlying issue that is the cause of this worrying phenomenon? 

Millennials are the ones being blamed for the dramatic drop in home ownership in recent years. This may be due to them being criticised for their spending patterns and laziness. However, perhaps there are not so obvious reasons that can explain this phenomenon. This matter is a pressing one for owning a house has been seen as a necessity all these years; and if the youths are unable to afford one, it might pose a threat to their futures, be it social or economic.

This article will explore the possible explanations to the difference between homeownership rates of the millennials and that of the baby boomers. Also, this article will boldly attempt to argue that the baby boomer generation is inhibiting the growth of the millennials in terms of housing ownership.

1.0 Background

Baby boomers, born between 1945 and 1964, are the wealthiest generation as of today.They have earned collectively more than twice their succeeding generation, Generation X. The difference in income, interestingly, does not mainly stem from the economic growth. In fact, experts have argued that economic growth can only explain 20% of the economic growth. The main reason the baby boomers earned so much more is because of the size, social change and education (Brandon, 2008). The sheer size coming from the sudden rapid increase in the number of babies born (hence the term “boomer”) after World War 2 raised output and growth rates drastically. The baby boomer population represented a much larger share of the total population compared to Generation X and the millennials. Next, social change such as female empowerment increased the number of wage earners, therefore increasing total income. Lastly, higher levels of education compared to the previous generation enabled them to capitalise on productivity growth, technological innovation, and globalisation. 

Millennials, on the other hand, are defined to be those born between 1981 and 1996. They struggle to keep up with the previous generations in terms of wealth and income levels. The disposable income of millennials are lower than that of the previous generations when they were at the same age (Financial Times, 2018). This would mean that the millennials do not have as much to spend, compared to previous generations. This is unforeseen for one would reasonably expect the income of a millennial to be higher with the technological advancements and inflation, among other things. The difference in wealth between these two generations might be the one obvious explanation as to why homeownership rates among millennials are lower. 

2.0 Wealth Difference and its Implications on Homeownership Rates

We will discuss how the millennials are worse off in terms of homeownership rates; or to put it simply, the disadvantages of being a millennial. There are 3 main points to this argument, namely the rising prices of goods, rising student debt, and worsening of job opportunities. It is important to note that these are directly related to income level and wealth.

2.1 Rising Prices of Goods 

With advancements in education, technology, and job opportunities, one would expect the level of income of a millennial to be higher — but data proves otherwise. The key here is real wages, not nominal wages. Nominal wage is the gross amount,  whereas real wage is the “actual” amount factoring in the average cost of living of that particular year. Although nominal wages have increased, median real wages have been relatively stagnant. Worse yet, real wages among those with lower educational attainment has dropped across the years 1979 to 2017 in the USA (Congressional Research Service, 2018). This means that effectively, real wages have been declining which causes the accumulation of wealth among the youths to decrease, thereby making it harder to own a house. More specifically, the price of houses are increasing relatively to the wages. Housing affordability is worsening over the years due to the general increase in house prices, while real wages remain relatively stagnant (Henretty, 2019). Therefore, nominal wealth of the millennials might be deceptively higher, but their true wealth have certainly diminished, hence causing a decrease in homeownership rates.  

2.2 Rising Student Debt 

Another commonly argued reason for the decrease in wealth accumulation among the millennials is rising student debt — topping the charts as the highest non-housing debt in the USA (Maldonado, 2018). The increase in student debt as a proportion of wages is due to the drastic increase in the cost of education since the 1980s. In fact, the cost of attending university has increased nearly 8 times faster than wages did (Maldonado, 2018). This means that the millennials have much lower disposable income than that of the baby boomer generation at the same age (Financial Times, 2018). With a decrease in disposable income coupled with exorbitant housing prices, millennials face more difficulties with housing loan application thanks to high down payment and low disposable income, therefore making it harder to own a house. Now, one can argue that education is not a must to own a house quoting examples of how the baby boomers can do so without proper education. This argument is certainly invalid if taken into context. This is because millennials face higher competition in the workforce; and tertiary education is needed to secure a better job. School enrolment for tertiary education rose from 10% of world population in 1970 to 38% of world population in 2017 (World Bank, 2018). This shows that a greater proportion now has access to tertiary education. Since education is seen as a requirement to be hired, there might be a need for millennials to at least enrol in tertiary education to secure a good job. Clearly, rising student debt could contribute to a decline in homeownership rates among millennials. 

2.3 Worsening of Job Opportunities

While it is true that population growth comes with increased demand for goods and services, job opportunities have somewhat fallen behind. This can be attributed to technological advancements. For example, the invention of factory machines have rendered human factory labour obsolete.  There are many other cases of technology replacing humans in the workforce like combine harvesters replacing farmers, and bank ATMs replacing bank tellers. Although technology is argued to be used as an aid to human beings in the workforce, these cases are isolated and are usually only applies to higher positions in the workforce. That is to say, those with a much lower pay grade might see themselves replaced by machines. The decrease in job opportunities will increase the unemployment rate among millennials (but interestingly not among baby boomers, which we will discuss the reasons why later on). A rise in the unemployment rate again relates to the wages of a millennial and the accumulation of wealth, therefore making it harder for them to own a house. 

3.0 The Baby Boomer Problem

The reasons stated above might not be as simple as it seems. What’s intriguing is that while these problems exist, they do not seem to affect the baby boomers. This leads us to question whether the baby boomers are indeed the cause of these problems. We will now discuss how the baby boomers are directly affecting the homeownership rates of the millennials.

3.1 Housing Prices

Baby boomers, being the wealthiest generation as of today, can afford to buy more than one house as investments. Those close to retirement have turned to speculating as an active investment strategy to make up for their shortfall in their retirement accounts, according to the Los Angeles Times. The affordable housing campaign, PricedOut, suggested that those who bought houses in the 1980s saw their house prices increased over the years and are seeing it as an investment now. This will definitely increase the demand for houses. So, while the millennials are struggling to own their first homes, baby boomer speculators are buying houses for investment purposes, thus increasing housing prices. Furthermore, the baby boomer – being richer than millennials – can offer a higher price for a particular house compared to what a millennial can offer, thereby distorting the housing market. 

The baby boomer problem does not stop there. When the wealthier generation own more houses, they can lease the house for rental. Since the baby boomers want to make a profit out of their investments, they can charge a much higher rental than the market price. This will cause a staggering effect on the rental market increasing the median rental. The Royal Institute of Chartered Surveyors (RICS) have predicted that rental prices in the UK is set to increase by 15% over the next five years (Borland, 2018). Millennials who cannot afford to buy a house must rent a house for shelter. If they are paying the high price of rental, their disposable income will surely be lower, hence affecting their ability to own a house. Therefore, rising house prices can be said to be the fault of the baby boomers looking to buy more than one house as an investment or for leisure purposes. 

3.2 Effect on Student Debt

Baby boomers also affect student debt, albeit indirectly. To see the relationship between these two variables, we must study one of the reasons for student debt, that is the rising cost of education. The cost of education can be directly linked to the baby boomers in 2 ways.

Firstly, the cost of education increases because the demand for education increases. This happens because the workforce is becoming more competitive, and because education is a standard requirement for a job. The baby boomers are the ones who helm the top positions of the Human Resource (HR) departments, therefore deciding who to employ. If top HR executives choose to focus on education as the recruiting process, instead of more important interpersonal skills and character, then the millennials would try their best to be enrolled in a school with better education. However, the government can only provide so much public schools due to financial constraints. This will make the millennials turn to private education, which costs so much more. 

This leads to the second point: the high price for private education increases the burden of student debt. A recent report by the National Centre for Education Statistics (NCES) showed that private schools can charge school fees of up to $25,000, while in comparison, public schools only charge a small fee or sometimes even free of charge because it is paid by local taxes (Lindenberger, 2019). Baby boomers are most probably the owners of private schools. Instead of charging a reasonable fee, they choose to introduce sky-high fees ignoring the plight of the younger generation. After all, private schools are firms that aims to maximise profit instead of maximising welfare of the society. The role of the baby boomers in the rising cost of education contributes to the increase in student debts, therefore reducing the homeownership rates among millennials. 

3.3 Diminishing Job Quality

In the earlier section, I proposed that job opportunities are decreasing because of technological advancements. Baby boomers might also be the reason there are no better jobs in the market because most of them are already taken up by the baby boomers. The fact that the baby boomers are holding on to their jobs is not good news to the millennials as well. As of May 2018, 19.8% of Americans aged over the retirement age, 65, are still working (Crudele, 2018). In Japan, more than 70% of those aged between 55–64 years old are still in the workforce (OECD, 2019).  Although the millennials make up the biggest proportion of the workforce now, the baby boomers are still not far behind, making up 41% of the workforce compared to the millennials making up 56%, as of 2016 (Emmons, 2018). The quality of the job, in terms of salaries and organisational hierarchy, held by the baby boomers are also, more often than not, better than that of the millennials. A simple illustration of this is that 8 out of 10 of the richest people in the world are baby boomers, while only 1 of them is a millennial. Also, the common practice of firms to promote employees based on seniority does not work in favour of millennials, because a baby boomer will tend to promote one of their own. This makes it very hard for millennials to climb up the corporate leader which leads to them making significantly less than baby boomers. Therefore, the probability of a millennial of owning a house is less than that of a baby boomer.

4.0 Possible Alternative Explanations

The list of reasons above are by no means exhaustive. There are, in fact, many other possible explanations as to why homeownership rates are lower among millennials than among the baby boomers at the same age. These include personal preferences of millennials, and different goals in life. For instance, millennials might actually choose to rent a house instead of buying one for they do not see the need in that. Also, studies have shown that millennials are marrying at an older age, therefore only wanting to buy a house later in their life. The lack in sense of urgency among millennials to own a house could be the reason why homeownership rates are falling. Moreover, while the baby boomers saw that buying a house is a way to secure financial security in the later years, the millennials might not, thus displaying the difference in economic ideology. 

These alternative explanations were not included in the main argument for there is no direct relationship between these reasons and the baby boomers. Since this article focuses on how the baby boomers are influencing homeownership rates, I chose to rule out these other explanations for the sake of argument. 


 “Stop buying avocado toasts if you want to buy a house” advised Tim Gurner, a Melbourne luxury property developer to millennials. Indeed, millennials must save up to achieve the goal of owning a house. However, this article has shown that the baby boomers almost certainly caused the reduction in homeownership rates of the millennials by affecting the accumulation of wealth through the housing prices, education costs, and employment channel. Therefore, it is not entirely the fault of the millennials if they cannot own a house. With the baby boomers still around, the millennials might have to very well struggle to own their first house.


Researcher:  Lee Yang Ler

Reviewer, Editor: Vikky Beh