Affordability squeeze pushes millennials to hold off on homeownership, embrace co-living

22 October 2026

A new study from the Federal Reserve Bank of Minneapolis argues that the traditional measure of the under-35 homeownership rate is misleading, as it simply counts young adults living in an owner-occupied home without considering whether they are the primary household head. Economist Erik Hembre says this approach should be updated to reflect the growing trend of young people living with family or sharing living spaces, which muddies the picture for things like mortgage rates and rental prices that the regulators keep track of.

The Urban Institutes says a 1 percent increase in a household's rent-to-income ratio decreases the likelihood of homeownership by 0.07 percentage points. According to the organization's data, the number of 18-34-year-olds living in rental houses that cost at least 30 percent of their income has increased from 38.4 percent in 1990 to 49 percent in 2015. New America concurs, claiming that a 10 percent rise in the ratio lowers a household’s odds of owning a home by 0.7 percentage points.

Housing affordability is at a generational low, and rising rents are a significant factor in pushing millennials and Gen Zers to delay buying a home. US Joint Economic Committee says only one-fifth of the largest metro areas over the last decade have produced new homes sufficient to keep up with job growth. TransUnion says 42 percent of millennials delayed buying after 2022 rate hikes, while Apartment List says 76 percent of millennials say they still plan to buy when they can afford a down payment.

This is leaving a demographic that grew up in the 2008 housing collapse and the 2020 pandemic facing high costs, high rents, and a limited supply of affordable options. According to Apartment List's 2023 report, by age 30, 42 percent of millennials owned homes compared with 48 percent of Gen Xers, 51 percent of baby boomers, and nearly 60 percent of the Silent Generation.

A disappearance of independent millennial households

The main reason millennials are renting longer is the cost of urban living, which was exacerbated by the rise of remote work during the pandemic. "The fact is that young people may exchange the stress of owning for the cost of renting, or fear that they might not be able to shoulder the cost, says Apartment List in its renters report. The Washington Post reported in 2019 that home ownership in the US peaked at 69 percent in 2004 and has fallen to 63.7 percent, driven by millennials figures from the U.S. Census Bureau.

There are indicators that suggest building in the cities could catch up to job growth, or that millennials may have burst out of the delayed buying backlog. But so far, rents in areas like San Francisco, San Jose and Denver have risen by more than 10 percent. Apartment List says 86 percent of Gen Z and millennials have delayed major life milestones because of rising housing costs, with 43 percent delaying home buying, 25 percent delaying retirement saving, and 24 percent delay starting a family. But the same report says 57 percent say they don’t have enough saved for a down payment, while 87 percent will still make home ownership a life goal.

Housing analysts say the delayed buying is happening in big cities, where housing supply cannot meet demand as more and more millennials move to urban cores for careers. The Wharton article says millennials have focused on equity appreciation in large cities by renting rather than buying, but a Reuters-syndicated report says that 69 percent of Gen Z are prioritizing relocating over squeezing to save. In line with that finding, a Coldwell Banker/Harris Poll says 84 percent of Gen Z are delaying major life moves entirely.

Co-living makes an impact, but is it long-term?

All of this explains the recent rise of co-living and shared space, though the economic development researchers, surveyors, and academics weren’t yet totally sure if this was recording a short-term change or a shift in housing patterns that could be permanent.

The coliving company notes that collaborative living can cut housing costs by up to 40 percent, while MarketWatch suggests the positive side of rental living is its flexibility. The University of Illinois notes many college students choose to live in the same house as roommates for convenience. Plus it's common to follow friends to the same apartment complex, or sign a lease based on a roommate’s reputation.

Bloomberg reports that these factors may apply downtown just as much within suburban metro areas. In multifamily or small house objects within major cities, Millennials may like knowing their neighbors or living in a certain development.

Apartment List also says that co-living has become popular among Millennials, Gen Z, digital nomads, and those who relocated for work, in turn shifting that kind of tradition. Instead of a family home, millennial renters are prone to seek certain amenities. They may move to live according to a certain leasing philosophy, or among friends. Participation by Millennials and Gen-Z in combined living greater amounts to a broader cultural and economic trend. That approach is particularly visible in major cities, where housing and purchasing a home is less affordable. It’s far from clear whether the startup-led trend will stick, but it's also not gone away.