The landscape of adulthood is constantly shifting, and for the newest generations entering their prime, the traditional milestones of life often look dramatically different from those of their parents and grandparents. Among these evolving markers, perhaps none has changed more profoundly than homeownership. Once a universally accepted rite of passage into stable, independent living, owning a home has become an increasingly elusive dream for many young Americans, especially those dubbed ‘Zillennials’—the cusp generation straddling the tail end of Millennials and the leading edge of Gen Z.
Indeed, the financial goalposts for acquiring a home have been pushed further away than ever before. While Baby Boomers might recall purchasing their first properties with relative ease, perhaps even in cash in some instances, the journey for today’s young adults is fraught with challenges. The National Association of Realtors recently reported a striking statistic: the average age of a first-time homebuyer has now climbed to a record 40 years old. This marks a significant jump from just four years prior, when the average age stood at 33, and a stark contrast to 1981, when the median age was a mere 29.
This dramatic shift is not happening in a vacuum. It’s a direct consequence of an “impossible housing market,” as many young people describe it, characterized by skyrocketing prices and stubbornly high mortgage rates. The median price of an existing home today stands at an astonishing $415,200, representing an increase of more than 50% since 2019. To compound the challenge, mortgage rates are currently roughly twice as high as they were in late 2021. This contrasts sharply with 1981, when the median home price was $68,900—though it’s worth noting that mortgage rates then averaged nearly 16 percent. While the rates were higher back then, the purchasing power relative to income and property values has fundamentally changed, transforming the typical monthly mortgage payment from around $1,100-$2,650 in 1981 to approximately $2,067 today, often for a significantly higher initial cost.
Such daunting figures are casting a long shadow over the financial outlook for many. A recent study revealed that 47% of Americans feel a sense of pessimism about their finances primarily due to the housing market. This sentiment is even more pronounced among younger generations, with 59% of Gen Z and 55% of Millennials sharing this concern. In contrast, Gen X felt this way only 43% of the time, and a mere 35% of respondents aged 59 and older reported similar feelings of financial unease regarding housing.
Faced with such formidable economic headwinds, young adults are increasingly turning to their closest allies: their parents. A new Intuit Credit Karma report illuminates this trend, showing that 38% of Gen Z homeowners received financial assistance from their parents to purchase their homes. For those not yet homeowners, an even higher proportion—44%—expressed plans to seek family financial support to achieve their home-buying aspirations. This emerging reliance on family signals a pragmatic, yet significant, deviation from traditional paths to homeownership.
Beyond just parental assistance, Gen Z is also more open to unconventional co-buying arrangements. The report indicates that a notable 59% of Gen Z was significantly more likely to consider splitting the purchase of a home with someone other than a romantic partner. This could mean friends, siblings, or other family members pooling resources, showcasing a collective problem-solving approach to a systemic challenge.
As Courtney Alev, a consumer financial advocate at Credit Karma, aptly put it, “Housing costs have soared these past few years, leaving consumers to grapple with the least affordable housing market we’ve seen in decades.” She notes that “young people are tapping their inner circles to try and make homeownership a reality, whether that’s mom and dad offering to help with a down payment or propositioning their friends to co-buy.” This reality, where soaring rent costs and an almost impossible housing market define the backdrop, makes parental support not just helpful, but often a necessity.
Financial experts universally advise that housing expenses should ideally not exceed 30% of one’s gross monthly income. Yet, for a significant portion of Americans, this benchmark is an unattainable luxury. Around one in three Americans reports dedicating between 31% and 60% of their income to housing, and a staggering one in ten even dedicates more than 60% of their income to housing each month. These figures paint a vivid picture of the immense financial strain endured by many, leaving little room for savings or other essential expenditures.
In response to these escalating costs, some have opted out of the independent living dream altogether, choosing instead to remain at home with their families. Nationwide, 14% of adult Americans live with family, a figure that jumps to a whopping 31% for Gen Z-ers. Even among those who have successfully moved out, the path to homeownership appears to be increasingly obscured. The Credit Karma survey shockingly found that 22% of Americans now plan to rent forever, reflecting a significant shift in long-term financial expectations.
However, this heightened reliance on parents for homeownership, while initially seeming like a retreat, isn’t necessarily a negative development. Katherine Fox, a financial planner and founder of Sunnybranch Wealth, frames it within the broader context of a substantial wealth transfer underway from Baby Boomers to their Millennial and Gen Z children. As Fox explains, “Parents helping their children with a down payment are accelerating this transfer of wealth while they are still alive and using money to help establish their children’s financial security.” This active participation in their children’s financial well-being also opens crucial dialogues around money and family wealth, which Fox suggests is vital, noting that “Gen Z doesn’t only need help buying homes. They also need to learn the basics of financial education and growing wealth with their long-term financial security in mind.”
For many young people, homeownership today hinges on a confluence of factors: family wealth, location, and income. As Fox points out, “Gen Z-ers who make high incomes may be able to buy homes, but many who make high incomes will also live in high cost of living areas, which will reduce their home buying power.” This creates a frustrating paradox where even high earners can find themselves priced out of desirable locations. For those without the invaluable financial boost from their families, the prospect of homeownership remains a distant, perhaps even far-fetched, dream, at least in the foreseeable future. Laura Adams, a senior real estate analyst at AceableAgent, confirms this reality: “Gen Z-ers earning average or lower incomes or without family financial support will likely be forced to postpone buying a home until they can save enough for a downpayment, home prices come down, interest rates decline, or all of the above happen.”
Despite these formidable affordability headwinds, the aspiration for homeownership remains deeply ingrained in the psyche of Gen Z. A survey by realtor.com found that two-thirds of respondents still view homeownership as a profoundly important lifetime goal. Even as they face formidable barriers to entering the housing market, more than half continue to consider homeownership an integral part of the American dream. Furthermore, a resounding 69% agree that real estate offers a powerful opportunity to generate wealth, underscoring their understanding of its long-term financial benefits. While nearly half are ready to buy a home, only 36% report feeling financially prepared for such a significant undertaking.
This disconnect between aspiration and reality is particularly poignant given the persistent societal perception that 30 is the average age for buying a home. A recent Empower survey found that Americans generally believe one should land their dream job at 29, buy their first home at 30, and earn six figures by 35. These expectations clash dramatically with the lived experience of younger Americans today, who are grappling with skyrocketing living prices, a frozen white-collar job market with stagnant wages, record-high household debt amid rising interest rates, and the unfortunate necessity of drawing down 401(k)s as if they were standard bank accounts. For Gen Z, career advancement has emerged as the top milestone, listed first by 49.5% of respondents in the realtor.com survey, ahead of buying a house, getting married, or having children.
The low-interest-rate environment of 2020 and 2021 offered a brief, golden window for homeownership, providing an ideal time to secure reasonable mortgages despite rising house prices. However, many Gen Zers and Millennials weren’t financially ready to capitalize on this opportunity, often lacking the necessary savings. A 2022 Bankrate survey concretely identified affordability as the primary roadblock preventing these generations from owning a home.
Amidst these challenges, innovative solutions are emerging, often rooted in the very family support that defines this generation’s approach to wealth building. Consider the story of Melanie Guevara, 33, and her husband Devon Hollowood, 34. Their journey to homeownership is a compelling illustration of how the modern American dream is being re-imagined through collaboration and ingenuity. On a tranquil cul-de-sac in suburban Los Angeles, the installation of a prefab accessory dwelling unit (ADU) on Melanie’s parents’ property was quite the neighborhood event.
“It was like a block party,” recalled Martin Guevara, 68, Melanie’s father, describing the scene as neighbors gathered to watch the Villa Homes-designed ADU being craned over his existing home and settled into their backyard in the South Bay. This 850-square-foot home, delivered in two halves and already outfitted with appliances, became the innovative starter home for Melanie and Devon. “We were thinking, ‘Please don’t drop our house,'” Hollowood joked, reflecting on the unique experience.
The idea for the ADU blossomed during the COVID-19 pandemic, while Melanie and Devon were living in a rental in Hawaii with Melanie’s brother and his girlfriend. Melanie had just graduated from the UC Berkeley School of Optometry, and Hollowood, a software engineer for Google, was working remotely. Their discussions about next steps, particularly where to live, were deeply influenced by the housing crisis. Melanie fondly remembered the “ohana suites” common in Oahu, small family dwellings akin to ADUs, which sparked her initial “floating-in-the-ocean fantasy” of living in a small, owned house rather than continuing to rent.
Hollowood, with a more business-like perspective, shared their primary motivation: “We were trying to dodge the housing crisis. We couldn’t afford anything. We didn’t have money for a down payment. But we wanted our own place and didn’t want to waste money on rent.” Their vision was clear: to move into a backyard unit as a practical starter home. Melanie’s parents, Martin Guevara and Grace Kuo, both optometrists who purchased their 1,300-square-foot home for $300,000 in 1995, were deeply empathetic to their daughter and son-in-law’s housing struggles.
With mortgage rates being favorably low in 2021, the financial logic of building an ADU over continuing to rent was undeniable. “It just made so much sense financially,” Martin Guevara affirmed, adding, “And, of course, we loved the idea of them being close to us.” The ADU ultimately cost more than the Guevara-Kuos’ original home when they bought it, highlighting the dramatic increase in construction costs and property values over the decades, yet it represented a sound investment in a shaky financial market for the longtime homeowners.
Melanie took the lead in researching options, contacting several ADU companies. Villa Homes, offering 10 models, stood out. Their custom 850-square-foot prefab ADU was quoted at $475,000, a significant $100,000 less than bids from local contractors. The couple appreciated Villa’s preapproved designs and their comprehensive handling of permitting and project management. After the design phase, Villa poured the foundation, and the house was trucked in, installed by crane, and then finished with flooring, siding, paint, utility hookups, and the final stitching together of its two halves.
The finished ADU boasts a bright, inviting interior with a living room, two bedrooms, and two baths, a laundry area, a full kitchen with an island perfect for entertaining, and a cozy window seat. An IKEA sectional provides clever storage, and the second bedroom doubles as a guest room and a dedicated workspace for Hollowood, who works from home twice a week. Despite sharing the 8,400-square-foot lot, the orientation of the homes provides a comforting sense of privacy, while still allowing the family to enjoy gardening and communal dinners together. “We cook dinner together, and Bud [Martin] and Devon often host movie nights in the living room of the ADU,” Kuo, 64, shared, emphasizing the joy of their new living arrangement.
James Connolly, co-founder and CEO of Villa, was drawn to ADU manufacturing after witnessing the difficulties his mother faced in installing one in Northern California. He recognized the promise of the concept, particularly the affordability, speed, and efficiency of prefab construction. Connolly, who grew up in the Bay Area, understood the displacement many of his childhood friends experienced due to housing costs. “My parents bought a house for $225,000 when I was 4; by the time I graduated from UC Berkeley, it was worth about a million dollars,” he recounted. “Income opportunities, unfortunately, did not keep up, and it became impossible for my generation to buy a home. Eighty percent to 90% of the kids I grew up with were displaced. It was tearing families and communities apart.”
When laws in 2020 simplified the process for homeowners to convert garages into ADUs, Connolly saw a potent opportunity to address the housing crisis. He believes that this “multigenerational living theme is something that Americans will adopt moving forward, more like our international peers. It will be better for families. Everyone deserves to have a place that they can call home.” For Melanie, living at home for the first time since she was 18 has been an adjustment, but one she cherishes. She enjoys the proximity to her parents, allowing the family to “keep an eye on each other,” as Kuo humorously put it.
The young couple contributed a quarter of the ADU’s cost and plan to cover the mortgage as their rent. While they don’t foresee living in the ADU indefinitely, especially with hopes of having children one day, their parents are unfazed, viewing it as a flexible asset that can house other family members in the future if needed. Despite supply chain hurdles and protracted permit approvals, even with Villa’s assistance, the family is delighted with the outcome. “It’s a huge life upgrade,” Melanie enthusiastically shared. “And we can interact with my parents as much or as little as we like.” Hollowood concurred, “We’ve never lived anywhere bigger than this. It’s perfect for the two of us.” This innovative approach, while personal, offers a compelling blueprint for how young adults can achieve homeownership in an otherwise daunting market, leveraging family support and smart, adaptable housing solutions.
