Over 40% of millennial and Gen Z homeowners claim they struggle to afford their regular housing payments, a substantial number but less than the 70% who are saying the same about their rent, a Redfin survey found.
In May, a survey conducted by Ipsos for the real estate company had over 4,000 homeowners and renter responses. This latest report looks at the nearly 2,000 people who said they have issues with being able to pay their housing costs.
Among the issues plaguing homeowners in particular are the rising costs of property taxes and insurance. But renters do not pay property taxes and if they have the coverage, renter insurance premiums are lower than owner policies.
Survey respondents were considered to have an issue if they made one of the following selections in the survey: “I struggle greatly to afford them;” “I regularly struggle, but sometimes okay;” or “I sometimes struggle, but generally okay.”
Why homeowners are more able to afford housing
Across all three demographic groupings, homeowners are in a much better position than their renter counterparts when it comes to being able to afford housing, but the degree varies.
Just under 80% of baby boomers who own homes said they can easily afford their payments, followed by 63% of the Gen Xers and 59% of the combined millennial/Gen Z sample. The survey report did not mention structures like house hacking that younger generations use to afford their payments.
But 32% of millennials/Gen Zers admitted they sometimes struggle, while 30% of Gen X and 18% of baby boomers gave that response.
However, less than half of boomer renters can easily afford their costs, followed by 33% of Gen X and 30% of millennial/Gen Z.
How they look to manage their budget varies based on age demographic and whether they own or rent.
What sacrifices do struggling families make for housing
Struggling millennials and Gen Zers homeowners are more likely than those who rent to sacrifice what Redfin considers to be luxuries, like eating out at restaurants (43%) and taking vacations (36%).
On the other hand, 11% claimed they skipped meals completely to make their mortgage payment, while 13% have delayed medical treatments.
For renters in this age group, 40% eat out less often, one-third said they took fewer vacations, 27% borrowed from friends or family, one-quarter said they took an extra shift at work, 22% reportedly missed a meal, 22% sold belongings and 19% delayed medical treatments.
Among the older demographics, 45% of both baby boomer and Gen X homeowners ate out at restaurants less often to afford their mortgage, and roughly two-in-five of both groups took no or fewer vacations.
Those younger generations are “making real sacrifices” in order to afford their housing payments, Darryl Fairweather, Redfin chief economist, said in a press release. But members of that age group who can successfully make their payments have an advantage: The Bank of Mom and Dad.
Why some younger families can afford to buy a house
“At the same time, a lot of the young people who can easily afford housing can do so because they have major financial support from their parents, with roughly one-quarter of the young Americans who recently bought a home using family money for their down payments,” Fairweather said. “With the cost of buying a home rising much faster than wages, people without access to family money are much more likely to struggle to pay for housing — which could widen the gap between the haves and the have-nots in the future.”
A sign that certain groups do have money set aside, even if not being used for the intended purpose, 26% of struggling boomer homeowners will dip into their retirement savings, while 17% of their cohort renters will do the same thing, the most of either group.
For Gen X, it is 16% owner and 13% renter, and among millennial/Gen Z, it is 13% and 8%, respectively.
