You Don't Need to Own a Home to be an Adult

Look around on social media and you'll see all kinds of memes, TikTok videos and tweets from Gen Z and millennials who feel like they've been left behind by the current housing market. Whereas previous generations might have been able to buy their first home in their 20s or 30s. People who are that age today are facing a housing market that has really limited inventory and absurdly high prices, which kind of makes you wonder, do you still need to own a house to show that you're an adult? To find out, I decided to talk more with one of my favorite adults, NerdWallet's mortgage rate expert Holden Lewis. Hey, Holden. So something that I've heard is that people are kind of waiting around to see if home prices are just going to implode, right? There's this idea that maybe we're in a housing bubble. Oh, gosh, don't wait just because you think that we're in a housing bubble, because we almost certainly are not. I mean, let's compare it to like 2005. Back then, it was just there was this mania for like buying houses to flip them. And people thought that they could just buy a house, not even fix it up, sell it in a few months at a big profit. There was just this this this mentality, you know, this bubble mentality. And that's not the case now. I mean, yeah, home prices are going up really, really fast. But that's just because there's this huge imbalance in supply and demand. There's a gigantic demand, right? And they're just not enough homes for sale. And that's what's causing home prices to go up. Right. And going up from numbers that are higher because of all the increases that we saw, things just are not how they were when previous generations were kind of coming into that prime home buying period. I think a lot about generations, you know, you know, 30 somethings wanting to buy a home to stop renting and sort of having to to accept that idea that maybe, OK, actually renting throughout my 30s is is just fine. Whereas, you know, I think of of grandparents who have grandchildren living in another city and they're thinking, wow, OK, I'll I'll sell my house and buy a house in in my kid's city so I can be near the grandchildren. But their kids live in really expensive city and they feel priced out. You know, I mean, I think that that's probably a small contributor, but it might be a contributor of the lack of houses for sale is just older generations wanting to downsize or or move closer to the grandchildren. And they're priced out because the places where they would go just happen to be really expensive markets. Absolutely. I mean, definitely, you know, if you're looking at urban markets, but also if you're looking at sort of your traditional retirement destination markets, those are incredibly expensive. And so even something where, you know, five years ago or even two years ago, someone was looking at it and saying, oh, OK, you know, I'll sell my home and I'll retire there. They might not be able to afford to do that anymore or be able to afford to do that in the way that they prefer. And that in turn just sort of exacerbates that shortage of homes for sale because the exact homes that older people are hanging on to are houses that millennials and Gen Z would love to buy. Right. These are homes that are suburban. They're homes you can raise a family in. They're that perfect, you know, starter home. And we just don't have enough of them. I mean, I'm interested in what you've heard when you've talked to real estate agents, real estate agents almost always kind of fall into that role of being your sounding board, being a little bit your therapist, being someone that you can lean on. But, you know, when you're in a situation where you've had offer after offer after offer fall through, you know, they're going to be doing that even more. And so, you know, being able to keep that kind of larger goal in mind of, you know, this isn't just going to be an investment. This is going to be my home. This is going to be somewhere where I live, where my family lives. That's really important to have that touchstone, because otherwise, you know, I mean, how do you not crumble when, you know, you've maybe waived a contingency or two? You've offered over the asking, you know, you're really stretching yourself and you're getting turned down, you know, once again. You know, I've noticed something looking at real estate tick tock. There's this kind of undercurrent of cynicism in there. And I'm thinking, well, maybe some people, if they're starting to feel a little discouraged to actually like step away from tick tock, step away from Twitter, because, man, you know, it seems like that's where the frustrated people go. I mean, you know, there's also jubilant people there, but I don't know. Maybe it's just my personality and the algorithm working on me. But I just I tend to see kind of the the cynical. I don't know, almost despairing type stuff. Yeah. Well, I mean, there's a there are a lot of those memes out there, you know, and there is is definitely a sense of that sort of generational push and pull, you know, people who are in their 30s now and who feel like they're in their prime home buying years. There aren't homes to buy. Right. And so that's where you're getting all these, you know, my parents in their 20s, me in my 20s, like all those kinds of memes. People are kind of comparing themselves to those different milestones and those ideas about, you know, what it means to be an adult, what it means to be grown up is the notion of home buying being a hallmark of adulthood. Is that going away? I have this idea that that dog ownership has sort of turned into a prime aspect of of adulthood where it wasn't like 20 or 30 years ago. And I'm wondering, OK, is that sort of sliding in, you know, dog ownership? And then the notion of owning a home is sort of sliding out where people are saying, you know what? I can be a full fledged adult and remain a renter all my life. I mean, I'm just wondering, do you think that that that that sort of thing is happening? Well, if dog ownership means that you're grown up, it's great news for me personally. But, you know, I mean, I think that's I think that's a really, really interesting perspective. And, you know, it's something that we certainly could see. There are certainly upsides to renting, and there's really there's no shame in in renting, right? You're still living independently and you can pick up and move and go somewhere else when you need to. If that's something that you're going to need to do for a bit longer rather than buying a home right away, that's totally fine. You know, there's not there's not a timeline for it. And there's there's certainly not a deadline. Like there's not necessarily a right time in your life to buy a home. And so, you know, depending on kind of what happens with housing inventory, I think that's something we might have to wait and see. In 2021, the average first time home buyer was 33 years old. That doesn't seem too old, right? But 40 years ago in 1981, that same first time home buyer had an average age of twenty nine. It's even more stark with people who aren't first time home buyers. In 2021, the typical age of someone who'd previously bought a home was 56 years old. In 1981, that person was 36. So when you look at the numbers, it kind of seems like people who are trying to buy their first homes today are the same age as people who were already looking to upgrade back in the early 80s. That's pretty wild. But whenever we're talking about homeownership in the United States, it's important to remember that this is something that has been out of reach for many groups. People of color have consistently been discriminated against in the U.S. housing market. And for younger people in these groups, it might be less about trying to keep up with their parents and more about trying to achieve the goal of becoming a first generation homeowner. But if you're really committed to becoming a homeowner, there is one thing that we definitely have over the 80s and even the 90s, and that's mortgage rates. Throughout 2021, rates hovered below 3% for 30 year fixed mortgages. And even if they go up in 2022, we're still talking below 4%. In 1981, rates hit a record high and were over 18%. And even in the 90s, a rate that was below 7% would have been brag worthy. So while we might want to bring back stuff like crop tops and chokers, some trends from the 80s and 90s, we are better off without. Hey, I'm Kate Wood, and I write about mortgages and homeownership for NerdWallet. If you want to read more of our 2022 predictions, head to the description where you'll find a link to the entire story, which is on our website. And while you're down there, give us a like and subscribe to our channel.