Millennials, Keep Your Avocado Toast and Ditch the Dream House

Avocado toast, hard seltzers, and Instagrammable vacations are not the reasons millennials and our Gen Z compatriots have failed to scrimp, save and budget our way into home ownership.

I've long been an ardent defender of renting and I stand behind the sentiment that it doesn’t equate to throwing your money away. Still, the chaotic rental market of recent years has made buying seem like the practical move, even in cities with a high cost of living, at least from a logistics and emotional turmoil perspective. The problem is that prospective homebuyers across the country are facing a housing shortage, are frequently boxed out in bidding wars, and have watched their purchasing power erode as mortgage rates surge.

Millennials have little choice but to compromise — either by giving up on homeownership or facing the reality of being able to afford less than what’s desirable.

Millennials have only known low mortgage rates, anchoring our expectations about what’s reasonable to an unrealistically low number compared to previous generations. In 2009, when the oldest millennials started thinking about homeownership, the mortgage rate was around 5.4%. It stayed under 5% for the next decade before the pandemic drop to under 3%. Now, we’re creeping toward double-digit rates for the first time since the early nineties.

Those who missed the opportunity to buy have lost tens of thousands of dollars in purchasing power since late 2022. Their frustration is compounded by the fact that homes prices continue to increase because housing inventory has dropped dramatically since the pandemic.