Gen Xers Have Barely More Home Equity Than Millennials, Despite a 15 Year Head Start

published Jul 28, 2017
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(Image credit: Jacqueline Marque)

Get your grunge playlist ready: Generation X has something new to moan about. The latest angst-inducing outrage? Gen Xers have barely more equity in their homes than millennials, despite a roughly 15-year head start on home ownership.

That’s according to Zillow’s latest home equity report, which shows that millennials with a mortgage owe a median of 76% of their home’s value, while Gen Xers owe just slightly less, at 70%. That leaves both groups with barely more home equity than a typical 20% down payment. The typical mortgaged Baby Boomer, meanwhile, owes only 55.6% of their home’s value, bringing the national median down to 62%.

Svenja Gudell, Zillow’s chief economist, chalks it up to timing: Much of Generation X hit its home-buying stride during the peak of the 2000s housing bubble, and had to ride out the Great Recession. Millennials, on the other hand, were starting to turn 30 (the median first-time home buyer is 32 years old) around 2011 — at the very bottom of the housing market. (Home values have risen 42% since January 2012, according to the Case-Shiller National Home Price Index.) Many older millennials who bought their first home around that time have been able to rack up an awful lot of home equity in just the past few years.

(Image credit: Jessica Isaac)

“While this period of uninterrupted home value growth has enabled millennial homeowners to fairly rapidly accumulate equity in more recently purchased homes,” Gudell said, “their older siblings in Generation X are in many cases only recouping losses in equity incurred during the Great Recession.”

Home ownership is a tried-and-true method of amassing wealth, and in the midst of a surging housing market — like the one we’re in now — it’s tempting to view one’s home as an investment (as opposed to a forced-savings vehicle that provides a cost-stable place to live). One reason that’s dangerous, though, is the uneven nature of price appreciation — and how much of it can depend solely on timing and when you’re ready to “settle down.”

More than 5 million homeowners owe more than their home is worth.

Just as the class of 2008, who graduated into the teeth of a terrible recession, may end up haunted by lower wages for more than a decade, many homeowners who entered the housing market in the mid-2000s are still trying to get back to even. More than 5 million homeowners, or about 10% of those with a mortgage, are still underwater — meaning they owe more than their home is worth.

As with all things real estate, location matters, of course. In areas hardest hit by the housing crash, such as Phoenix and Orlando, Gen Xers owe roughly as much on their homes as millennials do, despite (or more aptly, because of) their generational head start. In Las Vegas and Detroit, Gen Xers actually have slightly less equity than millennials on average. In markets like San Jose and San Francisco, meanwhile, prices have risen enough that even most Gen X homeowners can’t complain.

(Image credit: Minette Hand)

Many younger millennials, though, are now finding themselves locked out of the housing market by those same rising home prices (not to mention enormous student loan burdens). And while most economists don’t see a new housing bubble in the works, millennials who are able to buy their first home now are nonetheless getting a lot less bang for their buck than their older peers did five years ago — and could even be unwittingly purchasing near a peak, just as their Gen X counterparts might have done a decade ago.

All apologies, kids.