It’s no secret that homeownership has moved further out of reach for many people, especially younger generations challenged by too-high home prices against too-low wages. Here’s the latest on the housing affordability picture.

Key homeownership and income insights

  • 60% of Americans say their incomes haven’t kept pace with inflation in the last year; still, 46% of millennials and 46% of Gen Z have received a raise in the past year (Bankrate, Nov. 2023)
  • 35% of Gen Z and 32% of millennials say they’ll never be able to afford their dream home; 40% of Americans with annual incomes less than $50,000 share that sentiment (Bankrate, Oct. 2023)
  • 49% of millennials say their biggest hurdle to homeownership is “not enough income” (Bankrate, April 2023)
  • On an annual basis, home price appreciation has outstripped wage growth in 53% of counties (ATTOM, Q3 2023)
  • The typical mortgage payment on a median-priced, existing single-family home takes up 26.6% of the median family income (National Association of Realtors, Sept. 2023)

Pay raises collide with inflation

Nearly half of millennials (46 percent) and half of Gen Z (also 46 percent) reported having received a pay raise since October 2022, according to a November 2023 Bankrate survey. Thirteen percent received a raise of more than 10 percent — the highest of any other generation.

While that’s good news for many aspiring homebuyers in that age range, one major factor has tamped down those gains: inflation.

The annual inflation rate hit 9.1 percent in June 2022. It’s tracked back down since, but remained elevated for much of 2023. That means that, despite pay raises, those higher incomes haven’t gone as far. More than half (53 percent) of millennials and 44 percent of Gen Z say their incomes haven’t kept up with increasing household expenses due to inflation, according to Bankrate’s November 2023 survey.

For millennial and Gen Z homebuyers, affordability has been a challenge for some time. Home prices were already on the rise pre-pandemic, but then they really rocketed up in 2020 and 2021 as mortgage rates sank to record lows.

Inflation hasn’t helped. Shelter costs accounted for more than half of the overall inflation rate in October 2023. That same month, the typical existing home was priced at $391,800, according to the National Association of Realtors — an all-time high for that time of year.


Millennials who say home prices are too high

Yet, for the majority of millennials and members of Gen Z, homeownership remains a key component of the American Dream. Sixty-two percent of millennials and 63 percent of Gen Z associate owning a home with this achievement, according to Bankrate’s April 2023 survey.

Overcoming the home price and wage gap

Despite the obstacles, younger generations are still buying homes. In fact, 28 percent of homebuyers are millennials, according to the National Association of Realtors. Of those millennial buyers, the older cohort (age 33 to 42) have a median household income of $102,900, while the younger (age 24 to 32) have a median income of $86,000. The median income for Gen Z buyers: $50,400.

Even if they have the income to qualify for a mortgage, many would-be buyers don’t have enough savings to cover a down payment and closing costs. For many, too, a pay raise isn’t on the near horizon.

These strategies can help:

  • Explore low- or no-down payment mortgages: If you have strong credit and not a lot of other debt, you could qualify for a conventional loan with just 3 percent down. A lower-credit score FHA loan can be had for 3.5 percent down. If you’re an eligible service member or veteran, you could get a VA loan with no down payment. Likewise for USDA loans, available for homes in rural areas.
  • Look into down payment assistance: There are many forms of down payment assistance, from outright grants to lower-cost second mortgages. These are often geared toward buyers with low to moderate incomes based on location. Many programs can be applied to the down payment and closing costs, too.
  • Reconsider where you buy: Some places are simply much more expensive than others. If you have the desire and flexibility, a move to a more affordable city or exurb/suburb could significantly open up your home buying options. Check out these best cities for first-time buyers, many of which boast a healthy job market and homes at more feasible prices.


  • Home prices aren’t going down, but appreciation has slowed, according to the latest S&P CoreLogic Case-Shiller index, which found that prices rose 3.9 percent year-over-year in September 2023. That’s down from 10.5 percent year-over-year in September 2022.
  • Inflation is a constant, and it impacts both home purchase and rental prices. Post-pandemic, when inflation peaked at 9.1 percent, the median existing home price hit a new high of $416,000, a 13.4 percent year-over-year jump, according to the National Association of Realtors.

    However, home price appreciation has historically outpaced inflation. From an investment standpoint, that makes buying a home a relatively safe bet, especially if you get a mortgage at an attractive, fixed rate.