Redfin data shows that post-2022 homebuying costs for millennials have climbed to 35% of income, as pandemic-era price surges and higher rates create a generational affordability gap compared to baby boomers.
A Redfin research report documents that post-2022 buyers spend up to 35% of income on housing, that prices surged about 40% during the pandemic, and that prices are now falling or softening in parts of the US. Stretched affordability and softening prices argue for slower demand for new homes, but the report also notes rates could eventually fall enough to allow refinancing, leaving the net effect on homebuilders mixed.
A new Redfin report reveals that while elder millennials initially benefited from low interest rates, the post-2022 surge in home prices and mortgage rates has pushed housing costs to 35% of income. Unlike baby boomers, who leveraged decades of falling rates to refinance, younger buyers currently face a less forgiving market environment.
The report shows housing is less affordable than in past generations and prices are softening in some areas, which is a headwind, but it also points to possible relief if rates fall enough for buyers to refinance, so the effect is not clearly one direction.