Americans are living through the toughest housing market in a generation and, for some young people, the quintessential dream of owning a home is slipping away.<\/p>\n\n\n\n
Mortgage rates surged in recent years, hitting the highest levels in more than two decades last fall<\/a>. While rates have come down slightly since then, home prices remain painfully elevated<\/a> and a limited inventory of housing is still failing to keep up with demand. Such conditions mean that housing has become woefully unaffordable.<\/p>\n\n\n\n Falling mortgage rates in recent weeks have helped, but home prices could remain sticky, according to economists. It\u2019s still a cruddy time to be hunting for a home, but it\u2019s even worse for young, first-time buyers who need to save up for a down payment and build up their credit score during a time when Baby Boomers are refusing to part with their big houses<\/a>.<\/p>\n\n\n\n The situation isn\u2019t a whole lot better for renters, with rents barely coming down from record highs and half of tenants in that market saying they can\u2019t even afford their payments.<\/a><\/p>\n\n\n\n The uneasiness over America\u2019s affordability crisis is captured clearly in surveys and polls, but data that outlines the sentiment specifically among young people is limited.<\/p>\n\n\n\n CNN spoke with some young Americans about their thoughts on the current state of the US housing market and their plans for the future.<\/p>\n\n\n\n Brandie Grant, 35, lives in the San Francisco Bay Area, one of the most expensive housing markets in the country. Despite a difficult upbringing, she pushed herself to graduate from college with a bachelor\u2019s degree and is now making $76,000 a year as a senior consultant for an academic publishing company, but she said she is barely making ends meet.<\/p>\n\n\n\n After paying all her bills each month, including $500 to chip away at more than $90,000 in student debt, Grant said she doesn\u2019t have <\/strong>enough to save for a down payment.<\/p>\n\n\n\n \u201cI\u2019m real, real tired,\u201d she said. \u201cHaving kids will never be on the table. I haven\u2019t even put a cent in my retirement fund, so there is just zero hope for me to ever own a home.\u201d<\/p>\n\n\n\n Brandie Grant. Courtesy Brandie Grant<\/p>\n\n\n\n The minimum down payment required to purchase a home depends on various factors, such as the type of mortgage being taken out, the prospective homebuyer\u2019s credit score, and the property\u2019s asking price. The conventional wisdom is that hopeful buyers should save to put down 20% before shopping around, but doing that is a pipe dream for those who can\u2019t even save to begin with.<\/p>\n\n\n\n But the typical downpayment for a first-time home buyer is usually much less: 6% last year, according to the National Association of Realtors. A government-backed Federal Housing Administration loan requires a downpayment of as little as 3.5%. But even saving up that much can be daunting.<\/p>\n\n\n\n And it\u2019s taking nine years for the typical homebuyer to save up for the median down payment on a home with the median value in the United States, according to Zillow data.<\/p>\n\n\n\n Ross and Emily Bunton.Courtesy Ross Bunton<\/p>\n\n\n\n Building up a down payment has also been difficult for Ross Bunton, a 26-year-old case manager living in St. Louis, Missouri, with his wife. That\u2019s mostly due to a combination of how expensive his rent is and their costly medical bills, which eat up a significant portion of the couple\u2019s monthly budget, he said.<\/p>\n\n\n\n Their current financial situation means having kids anytime soon is out of the question, he told CNN.<\/p>\n\n\n\n \u201cI genuinely haven\u2019t been able to save money over the past year,\u201d Bunton said. \u201cI don\u2019t think that buying a house is super realistic for me even within the next couple of years, so I\u2019m not really thinking about that right now, and if me and my wife were to have children, we would definitely want to be financially comfortable or capable of doing that. So, I also don\u2019t see that as being realistic.\u201d<\/p>\n\n\n\n For some, living with parents is the best option, and that certainly seems to be the case nowadays with housing affordability out of reach for many young people.<\/p>\n\n\n\n More than half of US adults between ages 18 and 24\u00a0lived with their parents in 2023<\/a>. That\u2019s been the reality for Corey Griffis, 24, who lives at his parents\u2019 home in Portland, Oregon.<\/p>\n\n\n\n He graduated with a master\u2019s degree in history last year from Montana State University, but said he hasn\u2019t had any luck finding a job. Aside from not having the financial stability of full-time employment just yet, he said he doesn\u2019t find it possible to own a home someday unless he finds a partner first.\u201cHaving two income streams does a lot for you, and I can\u2019t imagine owning a home until I\u2019m partnered with somebody,\u201d Griffis said. \u201cThe housing market is not a single person\u2019s market.\u201d<\/p>\n\n\n\n What typically happens when a regional housing market becomes too unaffordable is that people without the means simply move somewhere cheaper, such as a suburb an hour away, for example. A less common option is moving to a completely different country.<\/p>\n\n\n\n Shyahm Aguilar, 37, is a naturalized US citizen who came to the country from Mexico as a child back in the 1980s. He currently works at a hotel in Santa Fe, New Mexico, the most expensive market in the state, living in a rental single-family home with his sister and her three daughters.<\/p>\n\n\n\n Aguilar said he doesn\u2019t think owning a home in Santa Fe is \u201ca reality in the next 10 years,\u201d but that moving to Merida, Mexico, sometime in 2025 to start a laundromat business with his partner, who is currently working in Colorado, would probably be a much better bet.<\/p>\n\n\n\n \u201cWashers and dryers are not that expensive in Mexico, and we\u2019ve already looked at the price to start a lavanderia [laundromat], which would be like $10,000,\u201d Aguilar said. \u201cI can take that money to open a business over there. Over here, that\u2019s not even enough as a down payment for a house.\u201d<\/p>\n\n\n\n High mortgage rates are a big reason why some feel so dismayed with America\u2019s housing market. But there\u2019s been some good news lately.<\/p>\n\n\n\n The Federal Reserve has signaled that it will soon cut interest rates<\/a> now that decades-high inflation has eased off. Such a move will affect the average 30-year fixed mortgage rate, though economists say they doubt rates will fall below 6% this year.<\/p>\n\n\n\n The prospect of lower monthly mortgage payments has already improved Americans\u2019 attitudes toward the housing market, according to Fannie Mae\u2019s latest National Housing Survey, released last month.<\/p>\n\n\n\n \u201cHomeowners have told us repeatedly as of late that high mortgage rates are the top reason why it\u2019s both a bad time to buy and sell a home, and so a more positive mortgage rate outlook may [incentivize] some to list their homes for sale, helping increase the supply of existing homes in the new year,\u201d Mark Palim, vice president and deputy chief economist at Fannie Mae, said in a release.<\/p>\n\n\n\n Still, affordability takes into account mortgage rates, family incomes and single-family home prices, which remain a vexing pain point. The 2023 median home sale price<\/a> was $389,800, according to NAR, up about 1% from 2022 and the highest on record. Lower mortgage rates would improve affordability, but better zoning laws could have a more durable impact.<\/p>\n\n\n\n A person works on a rooftop during new home construction at a housing development in the Phoenix suburbs on June 9, 2023 in Queen Creek, Arizona. Mario Tama\/Getty Images<\/p>\n\n\n\n \u201cThe sustainable solution is to make it easier to build housing. That way we can actually start heading in the right direction with affordability and have that be sustainable and not just a short-term interest rate phenomenon,\u201d Daryl Fairweather, Redfin\u2019s chief economist, told CNN.<\/p>\n\n\n\n Fairweather\u2019s tips for young first-time buyers: Keep saving this year for when housing conditions further improve in 2025, invest some money into an index fund since the stock market is currently going strong<\/a>; be realistic about what neighborhoods you should live in; and consider other more affordable housing options, such as a condominium or a townhouse.<\/p>\n\n\n\n Sofiya Vyshnevska, chief operating officer at NewHomesMate, said that newly constructed homes may be a viable option for first-time buyers because some homebuilders are proposing incentives towards closing costs, such as a 2-1 buydown, which is a type of financing that lowers the interest rate for the first two years before it rises to the regular, permanent rate.<\/p>\n\n\n\n Vyshnevska said those deals are becoming more common in cities that have ramped up residential construction in recent years such as Minneapolis; Houston; Dallas; Austin, Texas; Tampa, Jacksonville, and Orlando in Florida; and Atlanta and Phoenix.<\/p>\n\n\n\n \u201cYoung, first-time homebuyers usually don\u2019t know about that because there isn\u2019t one place where they can see all of these incentives, so approaching the builder directly to make the deal work is a good option,\u201d she said.<\/p>\n\n\n\n