Planning for Low Affordability: Strategies for Homebuyers

Takeaways

• Amid record-high home prices and low affordability, the dream of homeownership is deferred for younger generations, pushing the median age of a first-time buyer to 40.
• Older generations hold a significant advantage, often buying homes with cash or large down payments. Meanwhile, the expected “Great Wealth Transfer” inheritance is proving to be later and smaller than expected.
• Effective solutions demand tailored financial planning. Older adults may need to plan for downsizing and supporting the next generation. Younger buyers often must consider alternative paths to homeownership, strategically use renting, and prioritize long-term financial security.

Many terms have been used to describe the intergenerational wealth shift expected as baby boomers, the richest generation in history, reach the end of their lives and pass on the fortunes they’ve accumulated over decades of rising home values, stock market gains, and economic tailwinds.

Economists have proclaimed for years that a massive inheritance boom is coming that could reshape the financial futures of Gen X, millennial, and Gen Z heirs. But that promise now collides with a housing market where younger buyers are struggling just to get in the door, while older buyers and entrenched owners dominate through accumulated equity and locked-in low mortgage rates.

The median age of both first-time and repeat homebuyers recently hit an all-time high in the United States, while the share of first-time buyers fell to a record low. For many would-be younger buyers, the American Dream feels like it’s slipping away — or already out of reach.

And as boomers live longer, spend more in retirement, age in place, and hold onto their homes, many younger adults are discovering that the inheritance they hoped would help level the playing field isn’t coming, or will be far smaller and far later than expected.

This widening intergenerational homeownership gap has consequences for Americans on both ends of the spectrum, and it demands different planning strategies for each that reflect today’s economic and housing trends.

The (Deferred) American Dream

The idea of a suburban home with a white picket fence has always felt like a bit of a 1950s cliché. But while the nuclear family is on the decline, and there is no longer a single “typical” family form anymore, one aspect of the American Dream has remained constant: having a place to call home.

However, high home prices, elevated mortgage rates, and wages that haven’t kept up with housing costs are making it increasingly difficult for young U.S. adults to afford a home. The widespread crisis in home affordability is evident. Eighty-two percent of Americans say owning a home is a linchpin of the American Dream. Yet almost an identical number (81 percent) of prospective buyers say down payment and closing costs are a significant obstacle.

Younger Americans are struggling to save for a down payment amid the affordability crisis that is stretching paychecks further and causing financial strain. Nearly half of Americans under 30 say they’re “barely getting by” financially.

Rewind a few decades, and many of the same young people who today are struggling just to afford basics would have been buying their first home.

The median age of a first-time homebuyer in 1991 was 28. In 2024, that number jumped to 38. In 2025, the median age of a first-time buyer reached a historic high of 40, according to a report from the National Association of Realtors (NAR).

A Tale of Two Americas

In another sign of the changing housing market, the baby boomer generation now makes up the largest age group of homebuyers (42 percent), the NAR also reports.

This puts them in direct competition with younger homebuyers, but the older cohort has a significant financial advantage. What’s particularly striking about this finding, says NAR, is that half of older boomers (ages 70 to 78) and two out of five younger boomers (ages 60 to 69) are purchasing homes entirely with cash and bypassing financing.

Jessica Lautz, NAR deputy chief economist and vice president of research, told Business Insider that boomers, “If they are financing, they are financing a smaller share of that purchase than other buyers are.”

Cash buyers and those who can afford a larger down payment are generally preferred because their offers eliminate financing hurdles and signal financial strength, leading to faster closings for sellers, reduced risk for lenders, and a lower interest rate for those who put more money down.

Down payments reached record highs in 2024, which favors wealthier buyers, especially those who use equity from rising home values to fund their down payments — thus widening the homeownership divide even further.

When President Trump recently floated the idea of the 50-year mortgage, many called attention to how much this would increase lifetime loan costs and risks. It also affects equity building. Buying a home at age 40, instead of 28, already shrinks lifetime equity accumulation. But buyers won’t build equity until well after 10 years into the life of a 50-year mortgage.

This classic tale of the rich getting richer while the poor get poorer is, in modern parlance, what is being called a “K-shaped economy.”

Americans over 65 make up around 17 percent of the population but hold half of the country’s wealth (nearly $100 trillion, Federal Reserve data show). The general assumption has been that, as this older generation dies, that money will trickle down to younger generations and give cash-strapped families a leg up. Call it the Great Boomer Wealth Transfer.

That’s also the way it has historically worked with property: the asset ultimately gets redistributed from one generation to the next. But in today’s upside-down real estate market, historical assumptions are falling by the wayside.

The much-hyped Great Wealth Transfer is proving to be somewhat of a myth. Longer-living baby boomers will end up spending much of their money on long-term care and end-of-life costs. Those who don’t may choose to spend it anyway. By the end of their lives, they may have little more than their house to pass down.

Given the affordability crisis many young people are facing, an inherited home, even one without a mortgage, might be more than they bargained for. Maintenance and other “hidden” costs were ranked as the largest regret of recent homebuyers in a Bankrate survey. An inherited home might also need extensive renovation, and if the inheritor chooses to sell, they could find themselves in a weaker market.

With most older Americans planning to stay put and age in place, the anticipated “silver tsunami” of boomers giving up their homes — and freeing up housing inventory — may not materialize anyway. Or if it does, it might be too late.

The average age of inheritance, like the average age of first-time homebuyers, is getting higher. With people living longer, it’s now around 51 years old, compared with 41 in 1989. Meanwhile, the median inheritance might barely cover the minimum down payment on a median-priced home.

Forty percent of millennials cited a gift from a relative or friend as one of the sources for their down payment in the NAR’s 2025 Home buyers and Sellers Generational Trends. More than half of Americans expecting to receive an inheritance consider it critical to their long-term financial security.

But expectations for receiving an inheritance are falling, and with it, the hopes of ever owning a home. According to a March 2025 Northwestern Mutual survey, 53 percent of Americans who don’t own a home believe it will never be financially affordable.

Solutions for Both Sides of the K-Shaped Economy

The data points and anecdotes are many, but they point to one clear conclusion: younger buyers are being priced out of the housing market.

That doesn’t mean younger adults should give up on the American Dream — or that older adults must sacrifice their well-being to fund someone else’s dream. But it does mean that planning strategies may need to shift to reflect this historical moment and the economic realities facing each generation.

What Older Homeowners Can Do (Without Upending Their Own Plans)

It’s not all second homes, vacations, and shopping sprees for older Americans. Many are navigating their own pressures — longer lifespans, rising health care costs, and homes that may ultimately be the primary asset they pass down. Their goal isn’t to fix the housing market or subsidize younger buyers, but to make thoughtful choices that protect their futures and reduce stress for their families later.

Start Planning Early for Eventual Downsizing

Whether downsizing, relocating, or purchasing a second property, planning in advance still matters. Reviewing how a current home fits long-term needs, reassessing the cost of maintaining multiple homes, and clarifying timelines help prevent rushed decisions and keeps housing aligned with care and financial goals.

Update an Estate Plan After Buying, Selling, or Moving

Any housing change should trigger an estate plan review to avoid surprises when property eventually changes hands. A brief review now may prevent major complications later. Focus on:

• Correct titling, especially for second homes or out-of-state property
• Updated beneficiary designations and equalization planning
• State-specific probate and tax implications

Plan Ahead for Leaving a Home to Heirs

A home can be a gift — or a costly burden. To ensure the home is received as a benefit, not a strain, older homeowners can prepare for:

• Property taxes, insurance, and home ownership association (HOA) fees
• Necessary repairs or safety upgrades
• Mortgage payoff details
• Clear guidance on whether heirs should keep, sell, or rent
• Funds set aside to cover early upkeep

Consider Intergenerational Support as Part of an Estate Strategy

Amid today’s affordability challenges, assistance provided earlier in life can have a greater impact than an inheritance decades from now. Without jeopardizing personal security, options may include modest early gifts, coordinated tax and long-term care planning, or co-signing arrangements with clear documentation.

Reevaluate Whether Staying Put Still Makes Sense

Aging in place is ideal for many, but not all homes are suited for it. Periodic reviews of maintenance costs, accessibility, and long-term needs can clarify whether remaining in place supports health and legacy — or if a future move may better align with present goals.

Prepare Your Home for Aging-in-Place or Eventual Sale

Simple steps now — organizing records, addressing deferred maintenance, adding accessibility features—protect a home’s value and create a smoother transition for both owners and heirs, whatever the future holds.

What Younger Buyers Can Do in Today’s Market

Younger adults face a housing landscape unlike any seen in generations: record-high prices, record-low supply, and the oldest median first-time buyer age in history. Homeownership is often delayed, but delayed is not the same as denied. Despite the path to owning a home looking different than it did for prior generations, younger buyers can still position themselves for financial stability.

Explore Nontraditional Entry Points into Homeownership

The first home doesn’t need to be the forever home. Several nontraditional routes can help younger buyers start building equity sooner, including:

• Multifamily properties with rental income
• Co-buying with siblings, partners, or friends
• Expanding the search radius to more affordable suburbs or regional markets

Build a Realistic Credit and Down-Payment Strategy

A focused savings plan can strengthen buying power in as little as six to 12 months. Paying down high-interest debt, cleaning up old credit items, and automating savings all help. Many buyers overlook state and local down-payment programs, forgivable loans, and closing-cost credits, which can significantly lower upfront costs.

Use Renting as a Strategic Advantage

With affordability stretched to historic levels, renting can be a practical financial phase rather than a sign of falling behind. In 2025, renting is cheaper than buying in all 50 major U.S. metro areas by an average of 38 percent. Renting while preparing for homeownership gives younger adults time to strengthen their savings, credit, and job stability before taking on a multidecade obligation. Money not used for a down payment can also be invested elsewhere to grow over time.

Understand Why Waiting Can Sometimes Be the Better Choice

Despite the pressure to buy early, patience can offer real advantages:

• Greater financial stability and less risk of overextending
• A clearer sense of long-term needs (commute, family size, lifestyle, retirement goals, etc.)
• Lower perceived risk to lenders and potentially better loan terms
• A more grounded approach to choosing a home that is truly affordable

Look into Employer- or Union-Backed Homeownership Programs

More employers now offer housing benefits as recruitment and retention tools. These may include down-payment grants, closing-cost assistance, or preferred lending terms. Public-sector workers and union members may also have access to similar programs.

Stay Flexible and Focus on the Long Game

Today’s housing market requires adaptability. Choosing a smaller home, considering a fixer-upper, or waiting for the right financial moment are all different ways to achieve the same goal: building stability and equity over time, even if the starting point arrives later than it did for previous generations.

And even before buying a home, younger adults can strengthen their financial situation by putting basic estate planning documents in place. Simple steps, like naming beneficiaries, creating a will, and establishing powers of attorney, help protect the savings and investments they’re building while they rent and work toward future homeownership.

Planning at Any Age

Different ages — and different circumstances — call for different estate and financial plans at every stage of life. A planning professional can help generations young and old chart a path that fits today’s realities and supports tomorrow’s goals.