Why fewer young adults are able to invest in homeownership

When Maryland Gov. Wes Moore was 8 years old, his mother told him she wanted to send him to military school to correct his behavior.

Yet it wasn’t until he was 13 that she finally did send him to a military school, in Pennsylvania. He ran away five times in the first four days.

“That place ended up really helping me change my life,” Moore said while speaking about retirement security at a BlackRock conference in Washington, D.C., on March 12.

One obstacle — the tuition costs — prevented his mother from sending him sooner, he said.

Moore was able to attend the school thanks to help from his grandparents, who borrowed against the home they bought when they immigrated to the U.S. to help pay for the first year’s tuition.

“They ended up sacrificing part of their American dream so I could achieve my own,” Moore said.

“That’s what housing helps provide,” Moore said. “It’s not just shelter. It’s security; it’s an investment. It’s a chance you can tap into something if an emergency happens. It’s a chance that you now have an asset that you can hold onto, and you can pass off to future generations.”

After retirement funds, housing generally represents the second-most-valuable asset people have, Moore said.

Yet achieving that homeownership status can feel unattainable to prospective first-time buyers in today’s economy.

Around 30% of young Maryland residents are thinking of leaving the state because of high housing costs, Moore said.

Both renters and homeowners across the U.S. are struggling with high housing costs, according to a 2024 report from the Joint Center for Housing Studies of Harvard University. The number of cost-burdened renters — meaning those who spend more than 30% of their income on rent and utilities — climbed to an all-time high of 22.4 million in 2022. At the same time, millions of prospective homebuyers have been priced out by high home prices and interest rates.

Many hopeful first-time homebuyers may feel that it was easier for their parents and grandparents’ generations to reach homeownership status.

Research shows those feelings are justified.

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Since 1980, median home prices have increased much faster than median household incomes, according to recent research from the Urban Institute.

Across the country, today’s 35- to 44-year-olds — who are in their critical homebuying years — are less likely to be homeowners than in 1980, according to the research.

For that age cohort, the homeownership rate has dropped by more than 10% compared with 45 years ago, the Urban Institute found. Because today’s 35- to 44-year-olds are also forming households at a lower rate, that number is likely understated,…