The Long-Term Financial Consequences of Delayed Homeownership for Millennials and Gen Z

The American Dream of homeownership, long a cornerstone of wealth accumulation, is increasingly out of reach for Millennials and Gen Z. A confluence of soaring home prices, elevated mortgage rates, and stagnant income growth has pushed these generations to delay homeownership, with profound implications for their long-term financial trajectories and intergenerational wealth dynamics. According to a Coldwell Banker report, 84% of Gen Z respondents are postponing major life milestones, including buying a home, due to affordability challenges. Similarly, 58% of Millennials feel forced to choose between homeownership and retirement security, with 46% identifying mortgage or home equity loans as the greatest threat to achieving a secure retirement. This shift is not merely a personal financial adjustment but a systemic reconfiguration of how wealth is built and transferred across generations.

The Wealth Accumulation Gap

Homeownership has historically been the primary vehicle for wealth accumulation in the U.S., with real estate serving as a stable, appreciating asset. However, the median age of first-time homebuyers has risen to 40, with 53% of aspiring buyers expecting to purchase their first home by age 40 or later. This delay erodes the compounding benefits of early equity gains and rental income, which are critical for building generational wealth. For example, Millennials now own $9.77 trillion in real estate, surpassing the wealth of the Silent Generation but still trailing behind baby boomers and Gen X. The disparity is stark: a Gen Zer purchasing a home at 40 will accumulate significantly less equity over a 30-year mortgage compared to a Boomer who bought at 30.

The cost of living crisis exacerbates this gap. Gen Z faces a 30% higher housing burden relative to their incomes compared to Millennials at the same age in 2005. With one-bedroom rents averaging $1,650–$1,671 monthly, many young professionals are forced to live with family or friends to save for down payments. This reliance on multigenerational support underscores a broader trend: 23.8% of Gen Z and Millennial homebuyers used family money-either as cash gifts or inheritances-for their down payments. While such intergenerational transfers temporarily bridge affordability gaps, they also highlight how wealth inequality is perpetuated through inherited assets, with the wealthiest 10% of households projected to pass down the majority of inherited assets by 2048.

Alternative Investments and Risk Appetite

Faced with limited access to traditional real estate, Millennials and Gen Z are increasingly turning to alternative investments such as private equity, venture capital, and cryptocurrency. These assets, while riskier, align with younger investors' appetite for innovation and digital-first strategies. A 2025 Modern Wealth Survey found that 31% of younger investors allocate funds to alternatives like crypto and private equity, compared to just 6% for older generations. For instance, 45% of young investors own cryptocurrency, viewing it as a core component of their portfolios rather than a speculative side bet.

However, the long-term effectiveness of these alternatives remains contentious. While real estate offers tangible assets and tax advantages like depreciation and like-kind exchanges, crypto and private equity are marked by volatility and illiquidity. A Bank of America study notes that 72% of younger investors believe traditional stocks and bonds alone cannot deliver above-average returns, yet alternative assets like private equity require high minimum investments and carry steep management fees. Meanwhile, real estate remains a durable option, with Brookfield Oaktree highlighting its potential for capital appreciation amid low valuations and shifting interest rates.

Intergenerational Wealth Transfer and the Great Shift

The Great Wealth Transfer-projected to redistribute $106 trillion to younger generations by 2048-will further reshape investment dynamics. Millennials and Gen Z are expected to inherit not only real estate but also diversified portfolios that reflect their values, such as sustainability-focused assets. The 2025 U.S. Alternative Investment Industry Report notes that institutional investors are increasingly allocating to real estate and infrastructure for yield and inflation protection, a trend likely to influence younger heirs. However, this transfer also risks deepening inequality, as those without intergenerational support may struggle to access high-growth opportunities.

For example, 18% of Gen Z and Millennial homeowners report sacrificing meals, vacations, or medical care to afford housing payments. This financial strain limits their ability to invest in wealth-building vehicles, compounding the effects of delayed homeownership. Conversely, those who inherit real estate or capital may leverage these assets to enter the market earlier, accelerating wealth accumulation.

Conclusion

The delayed homeownership of Millennials and Gen Z is not a temporary blip but a generational recalibration of wealth-building strategies. While intergenerational support and alternative investments offer partial solutions, they also reveal systemic challenges in affordability and access. As the Great Wealth Transfer unfolds, the choices younger generations make-between traditional real estate, volatile crypto, or sustainable alternatives-will shape not only their own financial futures but also the broader economic landscape. For policymakers and investors alike, the lesson is clear: addressing the root causes of housing unaffordability and expanding access to diverse investment tools will be critical to fostering equitable wealth growth in the decades ahead.