Your parents bought their first house at 25 for three times their annual salary. You’re 28, make decent money, and can’t afford anything within 50 miles of your job.
You’re not failing. The housing market is broken.
Let’s be brutally honest: For many millennials and Gen Z, homeownership isn’t delayed—it’s cancelled. Not because you’re irresponsible or spending too much on avocado toast, but because the entire system has fundamentally changed in ways that make homeownership impossible for an entire generation.
Welcome to the housing crisis, where wages haven’t kept pace with costs, investors have bought everything, and your landlord wants 40% of your income for a studio apartment with a broken AC.
Let’s break down exactly what happened, why you can’t afford a house, and what this means for your future.
The Numbers That Tell the Story
What housing costs looked like for your parents (1980s):
- Median home price: $47,000
- Median household income: $17,700
- Price-to-income ratio: 2.7x
- Down payment (20%): $9,400
- Years to save down payment: 1-2 years
What housing costs look like now (2025):
- Median home price: $420,000
- Median household income: $74,000
- Price-to-income ratio: 5.7x
- Down payment (20%): $84,000
- Years to save down payment: 7-10 years
The problem in one stat: Home prices increased 47% since 2020. Wages increased 15%.
Translation: Housing became twice as expensive relative to income. The goalposts moved while you were running toward them.
What Broke the Housing Market
This isn’t natural. This isn’t a free market. This is the result of specific policy decisions and economic forces.
1. Wall Street Bought Everything
What happened:
- After 2008 crash, private equity firms bought foreclosed homes
- Created rental empires (companies own 10,000+ homes)
- Turned housing into financial assets
- Small investors followed suit (Airbnb effect)
The companies:
- Blackstone
- Invitation Homes
- American Homes 4 Rent
- Progress Residential
The impact:
- Reduced inventory for first-time buyers
- Increased demand artificially
- Prices rose faster than wages
- Cash offers outbid regular buyers
The kicker: These companies have unlimited capital and can outbid you every time.
2. Zoning Laws Prevent Building
The issue: Single-family zoning restrictions prevent dense housing.
What this means:
- Can’t build apartments in most neighborhoods
- Can’t build townhouses or duplexes
- Land is artificially scarce
- Only single-family homes allowed
The result:
- Not enough housing being built
- What’s built is expensive single-family homes
- Affordable housing is illegal in most places
Who benefits: Existing homeowners (their property values go up)
Who loses: Everyone trying to buy a first home
3. NIMBYism (Not In My Backyard)
What happens:
- Developer proposes affordable housing
- Existing residents fight it
- “It will change the neighborhood character”
- “It will lower our property values”
- Project gets blocked or delayed for years
The real reason: People who own homes don’t want competition that might lower their home values.
The hypocrisy: The same people who complain their kids can’t afford homes block the housing their kids need.
4. Construction Costs Skyrocketed
Why building is expensive:
- Materials costs up 40% since 2020
- Labor shortages
- Regulations and permit costs
- Impact fees from cities
- Building codes (necessary but expensive)
The result: New homes cost too much to build profitably unless they’re luxury.
The pattern: Builders only build high-end homes because that’s where profit is. No one builds “starter homes” anymore.
5. Low Interest Rates + Inflation
2020-2021: Interest rates near zero
- Everyone could afford to borrow more
- Bidding wars became normal
- Prices exploded
2022-2024: Interest rates spiked to combat inflation
- Mortgages became expensive (7%+ rates)
- Monthly payments doubled even on same price home
- People who bought before 2022 aren’t selling (locked in low rates)
The trap: Houses are expensive AND interest rates are high. Double whammy.
6. Airbnb and Short-Term Rentals
The issue:
- Investors buy homes for Airbnb
- Removes housing from long-term market
- Raises prices in tourist areas
- Destabilizes neighborhoods
The numbers: Entire neighborhoods converted to short-term rentals in places like Austin, Nashville, Miami.
The impact: You’re competing with investors who can make more money on Airbnb than renting to you.
7. Foreign and Domestic Investment
What’s happening:
- Foreign buyers purchasing US real estate
- Domestic investors treating housing as investment vehicle
- People buying second, third, fourth homes
- Corporations buying entire neighborhoods
The problem: Housing is being treated as investment asset, not as place to live.
The squeeze: You’re competing against people with way more money who don’t need to live there.
Why This Time Is Different
“Every generation complains about housing!” they say.
But this IS different:
Previous generations:
- Wages kept pace with housing costs
- Starter homes existed and were affordable
- Investors didn’t dominate the market
- Single income could support mortgage
- Generational wealth could be built through homeownership
Your generation:
- Wages haven’t kept pace (prices rose 2-3x faster)
- Starter homes don’t exist (only luxury homes built)
- Investors buy everything with cash
- Two incomes barely qualify
- Homeownership increasingly out of reach
The data: Homeownership rate for under-35s has dropped from 43% (1982) to 39% (2024).
Translation: Fewer young people own homes than any generation since World War II.
The Rent Trap
Can’t afford to buy? You’ll rent. But rent has its own nightmare.
Rent in 2025:
- Average 1-bedroom: $1,700/month
- In major cities: $2,500-4,000/month
- Rental applications require: 3x rent in income
- So for $1,700/month apartment: need to make $61,200/year
- Security deposits: 1-2 months rent
- Move-in costs: $5,000-7,000
The cycle:
- Can’t save for down payment because rent is too high
- Stuck renting because can’t save
- Rent increases every year
- Never build equity
- Landlord gets richer, you stay poor
The math: If you pay $1,700/month rent for 30 years, you’ve paid $612,000 with nothing to show for it.
Landlord Problems:
What you’re dealing with:
- Arbitrary rent increases (sometimes 20%+)
- Refusing to fix things
- Keeping security deposits unfairly
- Invasive inspections
- Arbitrary rules
- No pets, no modifications, no control
The power imbalance:
- They can evict you
- You can’t withhold rent (in most states)
- Moving is expensive and disruptive
- They have lawyers, you don’t
The reality: Renting is expensive, insecure, and you’re building someone else’s wealth.
What This Means for Your Future
Impact 1: Delayed Life Milestones
What homeownership used to enable:
- Getting married
- Having children
- Stability and planning
- Building wealth
What happens when you can’t buy:
- Delay marriage
- Delay or skip children
- Can’t plan long-term
- Can’t build wealth
The data: 56% of millennials cite housing costs as reason for not having kids.
Impact 2: Generational Wealth Gap
How wealth is built:
- Own home
- Home appreciates in value
- Build equity
- Pass wealth to children
What happens when you can’t buy:
- No equity building
- No appreciation gains
- No wealth to pass on
- Your kids will be even worse off
The divide: Homeowners get richer. Renters stay poor. Gap widens.
Impact 3: Geographic Immobility
The problem:
- Rent is expensive everywhere, even “cheap” cities
- Can’t afford to move for better opportunities
- Stuck where you are
- Can’t escape bad housing markets
The irony: Previous generations could move for opportunities. You can’t even afford to stay where you are.
Impact 4: Retirement Concerns
The question: How do you retire as a renter?
The math:
- Social Security: $1,800/month (average)
- Rent: $1,700/month (current average)
- Food, healthcare, utilities: $500+/month
The problem: The numbers don’t work. You can’t retire and pay rent.
The options:
- Work until you die
- Depend on family
- Move to extremely low-cost area
- Hope for government assistance
The crisis: Millions of people will reach retirement age unable to afford rent.
Can This Be Fixed? (And Will It?)
What would actually fix the housing crisis:
1. Build More Housing
What’s needed:
- Eliminate single-family zoning
- Allow dense housing everywhere
- Streamline permitting
- Subsidize construction
- Public housing development
Will it happen? Slowly, in some places. Not fast enough.
2. Ban or Limit Investor Purchases
What it looks like:
- Ban corporate ownership of single-family homes
- Limit how many homes individuals can own
- Heavy taxes on vacant homes
- Penalties for short-term rentals
Will it happen? Some cities trying. Most won’t (too powerful interests).
3. Tax the Wealthy
How it helps:
- Tax wealth that comes from property appreciation
- Use money to build affordable housing
- Reduce incentive to hoard property
Will it happen? Probably not (wealthy control politics).
4. Strengthen Tenant Rights
What’s needed:
- Rent control
- Just-cause eviction laws
- Security deposit reform
- Habitability requirements
- Tenant unions
Will it happen? In progressive cities, yes. Nationally, no.
5. Government Housing Programs
Options:
- Public housing (like Vienna)
- Housing vouchers
- Down payment assistance
- First-time buyer programs
Will it happen? Some programs exist but insufficient scale.
The reality: Most of these won’t happen because:
- Homeowners benefit from high prices
- Investors have political power
- Government is captured by real estate interests
- “Housing as investment” is too entrenched
What You Can Actually Do
Since systemic solutions aren’t coming, here’s what you CAN control:
Strategy 1: Buy in “Boring” Cities
- Move to lower-cost markets
- Pittsburgh, Cleveland, Memphis, etc.
- Sacrifice location for affordability
- Remote work makes this possible
Strategy 2: House Hacking
- Buy duplex/triplex
- Live in one unit, rent others
- Tenants pay most of mortgage
- Build equity while living cheap
Strategy 3: Buy with Friends/Family
- Pool resources
- Buy together
- Legal agreements crucial
- Risky but makes ownership possible
Strategy 4: Fixer-Uppers
- Buy cheap house that needs work
- Do renovations
- Build equity through sweat equity
- Requires skills/time/tolerance for chaos
Strategy 5: Radical Acceptance + Alternative Paths
- Accept you might never own
- Build wealth other ways (investments)
- Focus on career/income growth
- Consider international moves
- Maybe inherit eventually
Strategy 6: Organize + Advocate
- Join housing advocacy groups
- Vote for pro-housing politicians
- Support zoning reform
- Attend city council meetings
- Join tenant unions
The truth: Individual solutions aren’t enough. This needs systemic change. But do what you can while pushing for bigger fixes.
The Bottom Line
The housing crisis isn’t your fault. You’re not financially irresponsible. The system is broken.
What broke:
- Investors bought everything
- Zoning prevents building
- Wages didn’t keep pace
- Housing became investment, not homes
What this means:
- Many millennials and Gen Z will never own homes
- Renting forever becomes the new normal
- Generational wealth gap widens
- Future retirement crisis looms
What might help:
- Building more housing
- Restricting investor purchases
- Strengthening tenant rights
- Geographic arbitrage (move somewhere cheaper)
- Political organizing for change
The harsh reality: Homeownership was the American Dream. For your generation, it might just be a dream.
But you can still build a life, build wealth, and find stability—it just won’t look like your parents’ path.
The system failed you. But you can still navigate it.
Just stop blaming yourself for something that was rigged from the start.