First-time buyers are facing a lifetime of paying rent, while baby boomers are living mortgage-free.
“What the current market creates is an environment where young people or families who had planned to build wealth now face a lifetime of renting, and parents who hoped to pass down property watch that dream slip away,” says Sam Bourgi, senior analyst at InvestorsObserver.
Middle-Class Incomes Barely Keep Up With Costs
Middle-income households are being pushed out by expensive markets to search for more affordable places, and that is a structural problem. They are forced to look for housing where markets are more affordable and available.
With the buy-rent gap flip, it becomes close to impossible for first-time buyers to save up for a house. Let's look at Oklahoma City and an average-sized 3-bedroom, 2-bathroom house. An average married-couple household has an income of around $100,000 per year, and their yearly rent now comes out to about $15,000. This leaves them with $85,000 a year for all other expenses and savings.
However, if they had a mortgage, payments could reach up to $2,000 in 2025, which comes to around $24,000 a year. Almost $10,000 less a year for other expenses, emergencies, and savings.
But if a couple was thinking about buying a house, they would need to factor in the 20% down payment. Let's say the house costs around $309,000. This means they have to save up almost $62,000 for a deposit, and then factor in the over $2,000 mortgage for 30 years. For first-time owners with a lower down payment percentage, the mortgage reaches even higher.
To save up for a deposit, factoring in 20% of their income to save, while paying $15,000 in annual rent, it would take them more than 3 years to have the down payment.
They would be paying rent without equity, and the prices of houses will probably be even higher, possibly prolonging the time it takes to save.
Saving becomes even harder for couples with children, as they need to calculate the child-rearing costs, leaving them with less income that can be set aside for a down payment.
The Mortgage-Free Divide Blocks New Buyers
The above-mentioned 40% mortgage-free rate tells only part of the story. 54% of them are baby boomers, which means that people aged 65 and above control a significant portion of the housing supply, leaving younger generations in a serious affordability crisis.
Homeowners with low mortgage rates are unlikely to sell, and those who are mortgage-free often have no urgency to do so due to their age, retirement, or other plans. This results in an estimated shortage of 2.8 million homes, which could take up to 10 years to fix.
Gen Z, however, is looking for ways to afford down payments and still own a home, rather than renting. According to the Bank of America, in 2025, 30% of Gen Z homeowners reported that they paid for their down payment by taking on an additional job, and 22% reported that they purchased their home with the help of siblings. However, this would be difficult for families raising children, leaving them with an impossible decision.
“The housing deficit has been in the US for more than a decade. Even with new units being built, a deficit remains. Housing demand will remain strong, and housing costs are likely to remain high. And while renting could sound like an easier option, that allows you to move around, reality is, for most families, it is the only option, and it does not build any equity in the end,” says Bourgi.
ABOUT SAM BOURGI
Sam Bourgi is a finance analyst and researcher at InvestorsObserver, bringing over 13 years of expertise in financial markets, economics, and monetary policy. His professional background spans the private, nonprofit, and public sectors, where he has held positions such as senior policy adviser, labor market analyst, and marketing director. Sam’s in-depth research and market analysis have been referenced by leading institutions and organizations, including the U.S. Congress, Department of Justice, Chicago Board Options Exchange, Bank for International Settlements, Boston University Law Review, Barron’s, and Forbes. Sam regularly appears on TV, including CBN, KFYR TV, and ABC30, and is often quoted by such media outlets as the SF Chronicle and MSN.
ABOUT INVESTORS OBSERVER
InvestorsObserver is a trusted source of independent financial analysis, market insights, and investment research for individuals and institutions. Founded to empower retail investors with actionable intelligence, InvestorsObserver delivers timely commentary, data-driven studies, and accessible financial tools designed to simplify complex market trends. Its research and insights have been featured by various media outlets, including Yahoo, The Guardian, Morning Star, Nasdaq, and more.
