Redfin estimates older millennials who bought homes at age 40 devoted a larger share of their income to housing than boomers did at that age, reversing an earlier affordability gap.
Redfin’s model put the age-40 share at 35% for millennials and about 25% for boomers. For a hypothetical millennial born in 1984 buying at age 30, the estimate was 27%, compared with 36% for boomers at age 30.
For buyers ages 40 to 44, Redfin estimated a monthly housing payment of about $3,000 for elder millennials and $1,986 for boomers, in 2025 dollars. Its millennial figures cover 2021 to 2025; the boomer figures cover the generation’s experience at those ages.
Redfin points to rising prices and borrowing costs as drivers of the shift. It estimates U.S. home prices advanced about 40% nationwide during the pandemic buying surge. Mortgage rates, near 3% in late 2021, approached 7% in late 2022, the company said. People who bought before 2022 could lock in very low rates, while later buyers faced the combined effect of higher prices and borrowing costs. Redfin said some prospective buyers were priced out.
Boomer households also faced high housing costs early in adulthood. Redfin’s estimates put their housing share above 60% when they bought in their early 20s, then around 26% by their late 30s. The company links the decline to falling rates over subsequent decades and opportunities to refinance.
“Before the pandemic, younger generations actually had it easier than the ones before them,” said Chen Zhao, Redfin’s head of economic research.
Redfin models payments for a median-priced home, assuming a 20% down payment and a 30-year fixed mortgage, with property taxes and homeowners insurance included. It compares the monthly total with median household income, so the estimates are a standardized comparison rather than a record of what every buyer paid.
Freddie Mac reported a 7.11% average rate for a 30-year fixed mortgage on Nov. 12. The next weekly reading is expected Thursday, Nov. 19.
