Making resolutions and manifesting a better future is all the rage around this time of year. However, the goal of becoming a homeowner is more about cold, hard, financial facts than the ability to channel the universe’s benevolent energy. And the two coldest, most indispensable conditions for home ownership are the down payment and the mortgage.
This means that home affordability is not just a present conundrum, but also a future issue, as well. As such, whether they’re younger or older Millennials, Gen Zers or Baby Boomers, home-seekers must answer two questions:
- Can I get enough money for the down payment now?
- Will I be able to cover my mortgage in the future?
The answer to both of these questions should be a resounding “yes.” But, with mortgage affordability eroding and the housing market getting tighter by the day, the answer might actually end up being more feeble than any home-seeker would prefer.
For those answers to be clear “yeses,” homebuyers should be able to comfortably cover the down payment and the mortgage. With “comfortably” being the operative word here, Point2 analysts calculated what people living and working across the U.S. could actually afford to buy. Then, they compared those amounts with the median home prices in the 100 most populous U.S. counties to see where homebuyers could afford more or less than the median home.
- Starting from each generation’s available net worth and the recommended percentage that they could invest in real estate, we calculated how much they could reliably set aside for a down payment on a home in each of the 100 largest counties.
- Then, taking into consideration their median income and the 30% rule, we calculated what the affordable mortgage would be for each generation.
- In the end, we calculated the maximum affordable home price that each generation could afford and the maximum square footage of living space that would be within their budget.
Gen Z Buyers Can’t Afford the Median Home in Any of the 100 Largest U.S. Counties; Baby Boomers Aren’t Doing Much Better
From as much as $1 million to a little more than $40,000, the price difference between the median home and the home that Gen Zers can actually afford opens a not-so-metaphorical precipice between young people and their homeownership dreams. Clearly, young professionals who want to buy property need to look far and wide (and settle for smaller homes) because the results are clear: Gen Z can’t afford the median home in any of the 100 largest counties.
Surprisingly, next in line are not the Millennials, but rather the Baby Boomers: They can’t afford the median-priced home in a staggering 89 counties. For Millennials, the median home is out of reach in 66 counties.
Only Gen Xers seem to get by a little better: With only 30 counties blocking their affordability hopes, Gen Xers can afford the median home in an impressive 70 counties.
Gen Z Can Afford to Spend Up to $561,074 on a Home — but That Doesn’t Mean Much
- The highest-value home that Gen Z buyers could afford was $561,074, in San Francisco County, CA and the lowest-value home within Gen Z’s budget was $100,397 in El Paso, TX.
- This might look good on paper. However, the median homes in both of these counties cost at least twice those amounts.
Whether it’s money, a car, a home, valuable art or anything else a person managed to accumulate, personal net worth could be the best predictor of someone’s purchasing power. Therefore, even more so than their income or savings, a person’s net worth might be a better predictor for how much home they can actually afford: In this way, a truly affordable down payment would represent a comfortable percentage of a home-seeker’s personal net worth.
Given their young age and low personal net worth, what constitutes an affordable home for Gen Zers might seem like an impossible dream in many counties. For example, the maximum amount that a Gen Zer living and working in El Paso or Hidalgo counties, TX could comfortably afford to spend on a home is a little more than $100,000. At the opposite end of the spectrum are Gen Zers from San Francisco and San Mateo counties in California: They could afford homes around $560,000 and $517,000, respectively.
Granted, these amounts might look good on paper. But, after a quick glance at the median home prices in these areas, Gen Z’s predicament becomes apparent: Median homes are two-and-a-half to up to three times more expensive than what they can afford.
When it comes to affordable square footage, Gen Zers in Suffolk County, MA have it the worst: Given their net worth, median income and the home prices in the area, they can afford only 245 square feet.
The young and lucky live in (or should move to) Gwinnett County, GA. Here, young earners in the 15 to 24 age group can comfortably afford 1,505 square feet of living space.
Millennials Can’t Afford the Median Home in 66 Large Counties
- Although the median home is out of reach for Millennials in the majority of counties, homebuyers in this age group can still afford homes around the median price and higher in 34 counties.
- What’s more, there are three counties where Millennials can comfortably afford homes above $1 million: San Francisco, San Mateo, and Santa Clara — all in California.
- The truly good news is that median homes in these three counties also hover around these prices.
Affordable homes for Millennials range from $182,000 in Hidalgo County, TX to an amazing $1.3 million in San Francisco County, CA. Plus, aside from San Francisco County, Millennials living and working in San Mateo and Santa Clara counties can also afford homes above $1 million.
What’s more, our analysis revealed that people in this age group could afford homes above the median market price in many of the 100 counties included in the analysis: Given their net worth and income, Millennials in 34 counties could afford homes above the local median — which is more than their Gen Z counterparts could even hope for.
However, this means that people in the 25 to 44 age group cannot even dream about the median-priced home in the other 66 counties. The biggest difference between the median home price and what would be an affordable home for a Millennial is in the case of New York County: Here, the average Millennial can comfortably afford an $823,678-priced home — but the median home is close to $1.5 million.
The most space Millennials can afford is a not at all shabby 2,963 square feet, in Fort Bend County, TX. There are also four other counties where people between 25 and 44 can afford more than 2,500 square feet of living space: Cobb County, GA; Allegheny County, PA; Will County, IL; and Baltimore County, MD.
Conversely, the counties where Millennials are most crammed are: Suffolk County, MA; Los Angeles County, CA; Bronx County, NY; Kings County, NY; Miami-Dade County, FL; New York County, NY; and Honolulu County, HI. In these counties, a home must have less than 1,000 square feet to be affordable for a Millennial.
Gen X Can’t Afford the Median Home in Just 30 Counties
- Gen X is the only generation that can afford homes above the median price in the majority (70) of the most populous U.S. counties.
- Based on their income and net worth, they can afford homes above $1 million in two counties: San Mateo and Santa Clara.
- Unlike Gen Z and Millennial buyers, Gen Xers can afford homes above 3,000 square feet and in no fewer than 11 counties.
Unlike Millennials, Gen Xers can afford homes above the median price in the majority of counties. In fact, this generation can afford the highest-value homes in the most counties. No other generation even comes close, as Millennials afford homes above the median price in only 34 counties, while Baby Boomers can do so in 11. Meanwhile, Gen Z homebuyers cannot afford homes above the median price in any of the 100 largest counties.
Naturally, Gen X can also afford the most space: In 11 counties, homes with more than 3,000 square feet are within their budget. And, in no fewer than 44 counties, homes between 2,000 and 2,999 square feet can be considered affordable for the average Gen Xer.
Baby Boomers’ Home Affordability Challenges Almost Match Those of Gen Zers (Who Are Much Younger with Much Lower Net Worth)
- Baby Boomers can’t afford a home above the median price in 89 counties.
- This means there are only 11 counties where Baby Boomer homebuyers’ income and purchasing power mean something.
Looking at the data for this generation, the most striking finding comes from New York County: Here, the difference between the median home price and what a homebuyer older than 65 could comfortably afford is a staggering $1 million: The average Baby Boomer could afford a home around $375,000, but the county median is close to $1.5 million.
On the opposite coast, the highest amount that a Baby Boomer could comfortably spend on a home is $701,537 in San Mateo County, CA. But, as was the case with the other generations, this amount only looks good on paper, as the median home price in the area hovers around $1.5 million.
When it comes to affordable square footage, Baby Boomers in Cobb County, GA were the most fortunate: An affordable home price would buy the average Baby Boomer 2,501 square feet of living space. Only six other counties boasted affordable home prices that would get between 2,000 and 2,500 square feet for buyers who are older than 65. What’s more, in 20 counties, Baby Boomers could only afford less than 1,000 square feet of living space.
Square Footage Overview: Only Gen X Can Afford Homes Larger Than 3,000 SF, Gen Zers Just 1,500 SF
Taking into consideration the affordable home price by generation and by county, as well as the local median price per square foot, some trends become apparent: If they want to get their foot on the ladder, Gen Zers do have options — but their reduced net worth limits them to smaller homes. They can afford homes with less than 1,000 square feet in 72 of the counties included in the analysis. But, the maximum space that Gen Zers can get (given their net worth) is 1,500 square feet — and only one county could make that possible for people in that age bracket.
Baby Boomers can afford to buy a home between 1,500 and 2,000 square feet in no fewer than 40 counties. Unsurprisingly, no other generation can quite match this feat, although Millennials come very close.
Gen X (those in the 45-64-year-old age group) seem to be faring the best when it comes to how much living space they can afford based on their net worth and personal income: They’re the only age group that can budget for homes larger than 3,000 square feet in 11 counties.
For the full data set used to calculate home unaffordability for all four generations in the 100 most populous U.S. counties, scroll through the following table:
- Study based on the 100 most populous counties in the U.S., sourced from the U.S. Census Bureau (2019).
- The median income per household sourced from the U.S. Census Bureau (2019), indexed for 2021 using BLS percentages and indexation rates.
- The median home price per county sourced from the Federal Reserve Bank of St. Louis.
- The net worth by age sourced from the Federal Reserve Board.
- For this study, we calculated the affordable down payment starting from each generation’s net worth and to which we applied the recommended asset allocation by age (For example, the average net worth of a Millennial living in New York County is $123,791. Of this, it is recommended that they invest 45% in a down payment, which means an affordable down payment should not exceed $55,706).
- We then took into consideration their income and the 30% rule to calculate the affordable mortgage for each generation.
- After calculating the affordable home price for each generation, we compared it to the median home price in each of the 100 counties included in the analysis to see where homebuyers could and couldn’t afford the median-priced home.
- To calculate the affordable square footage by generation, we took into consideration the affordable home price for each generation and the price per square foot in each of the 100 largest counties.
Fair use and redistribution
We encourage you and freely grant you permission to reuse, host, or repost the story in this article. When doing so, we only ask that you kindly attribute the authors by linking to Point2Homes.com or this page, so that your readers can learn more about this project, the research behind it and its methodology.
For an overview of the real estate market in some of the areas mentioned in this study, visit the links below:
Alameda County Real Estate
Arapahoe County Real Estate
Bernalillo County Real Estate
Broward County Real Estate
Clark County Real Estate
Collin County Real Estate
Contra Costa County Real Estate
Cook County Real Estate
Dallas County Real Estate
Jefferson County Real Estate
Hidalgo County Real Estate
Essex County Real Estate
Davidson County Real Estate
DeKalb County Real Estate
Denton County Real Estate
Denver County Real Estate
Snohomish County Real Estate
San Diego County Real Estate
Salt Lake County Real Estate
New Haven County Real Estate
Los Angeles County Real Estate
Kent County Real Estate
Fulton County Real Estate
Erie County Real Estate