First-Time Homebuyers Plummet 64% Since 2004 As Median Home Price Surges 100%

The American dream of homeownership is increasingly out of reach for younger generations, with first-time homebuyers facing significant challenges in the current housing market. Young adults are finding it necessary to live with parents or engage in house swaps with older relatives to save money and enter the market. The median-priced home, currently over $422,000, requires substantial financial resources, making it difficult for many first-time buyers, particularly Gen Z and millennials.

The number of first-time homebuyers has plummeted to a historic low. In 2004, nearly 3.2 million first-time homebuyers entered the market. By 2024, this number had dropped to just 1.14 million, highlighting the stark decline in affordability. Experts do not foresee this trend changing soon, especially if interest rates, inventory, and wage growth do not improve in favor of first-time buyers.

Alexandra Gupta, a real estate broker with The Corcoran Group, notes that the housing market is undergoing a significant reshaping. Many first-time buyers are turning to long-term renting or co-living models due to the high cost of homeownership. Others rely on family support to bridge the affordability gap. In Brooklyn, New York, the typical first-time homebuyer is in their early to mid-30s, often from dual-income households earning six figures. However, even with these financial advantages, the affordability gap remains substantial.

On the West Coast, the situation is similar. Tami Pardee, founder and CEO of Pardee Properties, highlights a "real mismatch" between savings and home prices. The median condo price in West Los Angeles is about $940,000, leading to monthly housing payments exceeding $6,600, which is more than $2,200 above the median rent. The typical first-time homebuyer in this market is in their late 20s to mid-30s, often from dual-income households earning low to mid-six figures, and many receive financial assistance from family members.

Pardee emphasizes the importance of community support in today's housing market. For many young buyers, the dream of homeownership feels out of reach, which can be discouraging. Planning and preparation are crucial for achieving the American dream of homeownership. Jeff Lichtenstein, CEO and broker at Echo Fine Properties, notes that younger people are saving more by reducing expenses on meals and vacations and living at home to accumulate savings. Creative housing solutions, such as older generations swapping homes with younger family members, are also becoming more common.

While easing mortgage rates and increasing the supply of starter homes and condos would help, these changes may not be as likely as hoped. Gupta advises starting the preparation process early, working with a local agent, and exploring first-time buyer grants. Patience, planning, and the right guidance are essential in navigating today's challenging housing market.