There is some optimism among millennials who have long struggled to become homeowners. A 2022 survey found that 51.5% of millennials between the ages of 27 and 42 now own their houses, overtaking the percentage who live as renters for the first time.
Despite this development, many older generations still find it difficult to understand the challenges that millennials are gripped with. Freddie Smith, an Orlando realtor and viral sensation on TikTok, broke down the financial obstacles millennials face in a way even the most skeptical boomer can understand.
Breaking Down the Financial Challenges
In a viral TikTok video, Freddie answered a commenter’s frustrated response about the difficulty of getting a mortgage while paying exorbitant rent. He responds to the analogy boomers often make, pointing out how significantly the financial situation has changed.
In the 1980s, you could often buy a house for $80,000. For this type of house, you need $16,000 for the 20% down payment. Today, a similar house would go for $400,000, begetting a down payment of $80,000. In addition, many millennials put down less than the required 20%—often as little as 3-5%. This results in far higher mortgage payments, making becoming a homeowner more difficult.
The Impact on Homebuyers
With their hardships in common, millennials connected with Freddie’s video. Many people expressed their displeasure with the rising expense of homeownership, which has affected their ambitions to purchase a house despite having a considerable income.
Others called attention to the topic’s omission of rising living costs and inflation. The video also generated reactions from Gen-Xers, who reflected on the reduced cost of living when they bought houses in the 1990s.
The Reality of Unaffordability
As a realtor, Freddie has seen the increasing unaffordability of “starter homes” for younger purchasers. Housing prices have increased significantly even in just the last three years, making the market out of reach for first-time homebuyers, especially millennials and Gen-Zers.
Many millennials actively save for a down payment, usually providing 3-5% of the property’s value. Some people need parental help or cosigning to join the market. The present market is dominated by older purchasers, including Gen-Xers and boomers, who use home equity to make more affordable down payments.
The Path Forward for Prospective Homebuyers
Freddie’s video initiated important conversations on home pricing, inflation, and generational understanding. Millennials’ responses revealed they face similar problems with homeownership and general inflation. However, some remain detached, giving conventional counsel without fully appreciating the reality of the modern world.
Freddie believes that the secret to success is to combat inflation while adopting a balanced lifestyle that includes hard work and important relationships. He thinks millennials can bring about change and direct the course of history toward a more promising future.
