“There’s no place like home,” Dorothy declares in the 1939 classic The Wizard of Oz.
Unfortunately for most young Americans in 2025, that sentiment has shifted to “There’s no way I’m buying a home.”
That reality is borne out by stats from a National Association of Realtors (NAR) 2025 report, which shows that baby boomers (ages 60-78) made up 42% of U.S. homebuyers in 2024, compared to younger millennials and Gen Zers (ages 18-34), who accounted for only 15% combined.
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Furthermore, the average age of first-time homebuyers in the U.S. has jumped about a decade since the 1980s to age 38 in 2024. [1]
Of course, it’s not that young people don’t want to buy a home. It’s just that they’ve been swept up in a storm of economic factors that have set them back when it comes to home ownership — and building equity.
To put it in Wizard of Oz terms, the state of today’s housing market means Auntie Em would be sitting pretty in her new digs while Dorothy saves for another few decades before she can hope to buy a home — unless, perhaps, she’s looking for one that’s located in the eye of a tornado.
And unfortunately for millennials and Gen Zers, there’s no wizard at the end of the Yellow Brick Road to help get them out of this mess.
Why home ownership is an uphill battle for young Americans
The average American boasts $313,000 in home equity — a serious chunk of change that many use for anything from funding their retirement dreams to expenses like long-term care. [2]
But building equity takes time, often decades, and the later in life you buy your home the less time you’ll have to build that nest egg.
Read more: How much cash do you plan to keep on hand after you retire? Here are 3 of the biggest reasons you’ll need a substantial stash of savings in retirement
Unfortunately, young would-be home buyers are held back by stagnant wages, inflation, relatively high interest rates and soaring house prices — even as sales head in the opposite direction in what the New York Times describes as “a doom loop.” [3]
Most millennials and Gen Zers make half or less of the $114,000 average salary needed to buy a home today. [4]
So it’s no surprise that a NAR survey found that 33% of younger millennials received a gift or loan from a friend or relative to help with a down payment. This is consistent with a Pew Research Center finding that only 45% of millennials claim to be financially independent from their parents. [5]
And if that wasn’t enough, Redfin reports that 78% of baby boomers plan to age in place, further limiting housing options for young buyers. [6]
Despite the dire scenario for millennials and Gen Zers looking to build long-term equity through home ownership, many young Americans are finding ways to build equity without even having to change their address.
How to build equity for the future without owning a home
For millennials and Gen Zers looking to build equity for a future in which home ownership is out of reach — or at the very least, delayed — there are alternative options to explore.
Finance expert and author Paco de Leon advises younger people who hope to eventually buy a home to crunch some numbers to help create a savings timeline for their financial goal.
“While models aren’t always 100% accurate,” she notes, “getting a broad view will help you understand housing economics beyond just what you need for a down payment.” [7]
Save Yourself: A good first step to building equity is to develop strong savings habits, according to CFA Ben Carlson. [8] There are numerous ways to do that, including setting savings goals, direct deposits into savings, meal planning, cutting unnecessary expenses and budgeting.
Invest, Invest, Invest!: You don’t have to wait to invest in a 401(k), IRAs, bonds, brokerage accounts, ETFs and stocks. Do your research to determine which works best for you and consider talking to a financial advisor.
JP Morgan researchers report that the cost of homes may be making investments more attractive than home equity. It certainly looks like Gen Z is buying into the market. Business Insider reports that in 2024, 37% of 25-year-olds added funds to a retail investment account in 2024 compared to just 6% a decade ago. [9]
Renting? Not a problem: While some may feel that renting is antithetical to building equity — because you’re putting the cash in someone else’s pocket — the New York Times spoke with numerous people who’ve used their rental situation to their advantage.
With no property taxes, mortgage or maintenance costs, one Tennessee-based construction manager said that renting allows him to “really bump up my savings rate” to 35%, commenting that “I’m building investment accounts much faster than I would ever build equity in the house.”
Millionaire author and entrepreneur Ramit Sethi agreed, telling the Times that if you run the numbers and “it’s cheaper to rent than to buy, you must invest the difference.”
Pay down your debts: This is another common piece of advice, but an important one. The sooner you eliminate credit card and other debt, the more money you’ll have to put toward investments in your future. Not to mention, your credit score will thank you.
Start a side hustle: Whether it’s selling your crafts online, freelance work, or driving an Uber, side hustles bring in extra income that can go toward your savings.
Aleksandra Medina, co-founder of Frich — a finance app aimed at young people — told Forbes that “This generation isn’t waiting for the economy to stabilize” but, rather, taking matters into its own hands with strategies like side hustles.
“Even if side hustles are short-lived,” she added, “the impact they have on Gen Z can be long-term.”
Sure it’s not as simple as clicking the heels of your ruby slippers. But it’s a solid start.
Article sources
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[1]. National Association of Realtors “2025 Home Buyers and Sellers Generational Trends Report”
[2]. ICE Mortgage Technology “Mortgage Monitor Report”
[3]. New York Times “U.S. homes are not selling, and prices continue to rise”
[4]. Realtor.com “Buyers Now Need To Earn 70% More Than They Did 6 Years Ago To Buy a Home"
[5]. Pew Research Center “Parents, Young Adult Children and the Transition to Adulthood”
[6]. Redfin “Til Death Do Us Part: More Than Three-Quarters of Baby Boomers Plan to Stay In Their Home As They Grow Older”
[7]. Refinery 29 “I’m Not Ready To Put My Savings Toward Real Estate. Where Else Can I Invest?”
[8]. A Wealth of Common Sense “How to get rich when you’re young” There are numerous ways to do that, including setting up direct deposits into savings, meal planning, cutting unnecessary expenses, budgeting and establishing savings goals.
[9]. Business Insider “Young people locked out of the housing market are turning to the stock market to start building wealth”
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