Millennials Lead Housing Market Despite Affordability Challenges
New data from Realtor.com reveals that millennials accounted for roughly half of all mortgage applications in the 50 largest U.S. metros in 2024. They are the most active buyer cohort, even in expensive tech hubs, despite significant affordability headwinds.
Millennial Mortgage Application Trends
While millennials (ages 28–43 in 2024) made 49.7% of mortgage inquiries in the 50 largest metros, this is a slight dip from 52.3% in 2023. Analysts attribute this decline to worsening affordability and rising participation from Gen Z, rather than a decrease in millennial interest. Their share peaked in expensive tech markets.
- San Jose: 62.6%
- Seattle: 57.1%
- San Francisco: 56.9%
High salaries in these areas help offset the high prices and substantial down payments. This reinforces a skills-and-income filter on who can buy property in these top metropolitan areas.
The "Buy Now, Pray Later" Approach
A recent Fortune report highlights that many younger buyers are adopting a "buying now, praying later" strategy. This involves relying on adjusted-rate mortgages (ARMs) or planning to refinance in the future. However, experts warn that this approach could become a financial "ticking time bomb" if interest rates do not fall significantly.
Down payments and loan sizes reflect the high cost of housing in tech hubs. The average millennial down payments in San Jose and San Francisco hit approximately $213,000 and $190,000, respectively. Typical requested loans are near $794,000 and $736,000, reflecting ultra-high list prices and limited housing supply.
Inventory and Rate Cut Risks
The Fortune report also points out that millennials and Gen Z are increasingly dependent on future interest rate cuts to make homeownership affordable. However, experts emphasize that there is "no guarantee" that rates will drop sufficiently, potentially leading to payment shock when ARM rates reset. Boomers' substantial equity and low-rate "lock-in" are also constraining resale inventory. Top Wall Street analyst Meredith Whitney suggests seniors "aren't moving anytime soon," which implies slow relief on supply even if rates ease. This maintains pressure on prices faced by millennial buyers.
Outlook and Implications
Near term, expect millennial demand to remain the primary driver for purchases, particularly in high-wage hubs. However, affordability constraints will keep activity uneven across markets. Modest interest rate dips alone may not unlock broad affordability, given stubborn prices and inventory limitations.
Elevated dependence on ARMs and refinancing hopes among younger buyers introduces refinancing and reset risk. If rates remain steady and prices stay firm, some households could face budget strain, potentially curbing discretionary spending and increasing vulnerability to economic shocks.
Boomers' staying power suggests limited existing-home turnover. Without a significant surge in new construction, the "lock-in" effect will continue to bottleneck inventory. This will sustain competition in millennial-favored metros and entrench a two-track market based on income and geography.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
