Millennials still locked out of buying houses despite salaries

Caitlin Baumann, 35, and her husband, Garrett, 40, of Massapequa Park, thought they did everything right to prepare to buy their first home.

They both are paid six figures at their jobs, in experiential marketing and financial technology, respectively, saved about $110,000 by diverting tax returns, bonuses and other money to their house fund over more than two years and don't hold any major debts besides one student loan.

Still, the house of their dreams — with four bedrooms, at least 2½ bathrooms and a backyard — feels out of reach, Caitlin said. The Baumanns, who have a 15-month-old son, said they're struggling to compete in a fierce Long Island real estate market against buyers with more equity and cash on hand.

"It's just frustrating that we've saved over $100,000 and we both make over $100,000 a year, which, for a millennial, that was always the dream. It's still not enough," Caitlin said. "Especially when you don't have a house already to sell, the seller's market is a very large hill to climb."

The Baumanns are not alone. Despite now being the largest adult generation in the United States and making more money than their older peers at similar points in their lives, millennials have struggled when it comes to homeownership, an issue that is magnified on Long Island. The region has long battled a housing crunch, where demand for homes cannot keep up with supply, experts say.

The COVID-19 pandemic exacerbated these issues, leading to even more competition as individuals and families fled the city for the greener pastures of the suburbs. That, in turn, has driven prices up, as buyers outbid each other and waive contingencies such as inspections and appraisals.

The median sale price of a single-family Nassau County home in March was $820,000, while in Suffolk it was $655,000, according to OneKey MLS.

'A little disillusioning'

Millennials, born roughly between 1981 and 1996, overtook baby boomers as the nation's largest living adult generation in 2019, according to the Pew Research Center. The number of millennials reached 72.1 million that year, compared to 71.6 million boomers (born between 1946 and 1964) and 65.2 million Generation Xers (born between 1965 and 1980).

Yet, according to the latest report by the National Association of Realtors, baby boomers made up 42% of all homebuyers in 2024, compared to millennials at 29%. This is a stark reversal of the prior year's numbers, when millennials made up 38% of homebuyers compared to baby boomers' 31%.

"There was a time when the prime home buying age was about 25 to 40 as families made it up a few rungs of the economic ladder," said Lawrence Levy, associate vice president and executive dean of Hofstra University's National Center for Suburban Studies. "Now, the distance between those rungs, the ladder itself is steeper because of everything from a lack of supply, which drives up prices, to higher interest rates and down payments that make both the initial purchase and the subsequent payments more expensive, and fewer programs available to help particularly first-time buyers."

The Baumanns moved to their current rental home after spending a year in Maine, where Caitlin is from, after leaving Brooklyn during the COVID pandemic. They adjusted to suburban life and fell in love with the North Shore's small-town vibes and rocky beaches. They started exploring the post-pandemic Long Island real estate market, but didn't have the funds ready for a down payment. Caitlin's pregnancy and the birth of their son prompted the Baumanns to start saving. Their ideal region is from Cold Spring Harbor to Northport, South Huntington and Greenlawn, but they said they may look elsewhere if they continue to encounter stiff competition.

Caitlin said each home they look at receives about 20 offers and sells for more than $100,000 over asking. From what she's seen, only offers with a 20% down payment seem to even be considered.

"Having looked in this market for a bit now, we know we're not going to be able to get anything absolutely amazing," she said. "At the least, [we'd want] something that has been well taken care of and might need some minor cosmetic updating." She added that might be a stretch, given that houses that haven't been renovated in decades are still attracting about $800,000 price tags, despite needing $50,000 to $100,000 worth of work.

When you add in closing costs and moving and everything, it's like almost $200,000, which is just an obscene amount of money to need in order to buy a house, most likely a fixer-upper.

— Caitlin Baumann, 35, of Massapequa Park

"Growing up, you think of the million-dollar house or the $800,000 house and that was a mansion. Now we're getting a little [three bedroom, two bathroom] that needs some work. It's definitely a little disillusioning to have it be such a massive swing," Caitlin said.

'The bar keeps getting higher'

During their search for a house, now more than a year long, Don Collins, a 37-year-old Rockville Centre-based program manager, and his wife have experienced many of the same issues as the Baumanns. The couple, who make between $200,000 and $300,000 and own their co-op, said they've since expanded their search area from their surrounding neighborhoods to both counties. Yet despite their strong financials, Collins said it's been hard to compete in Long Island's market.

"We're above the median income, which is an incredible accomplishment. ... I'm in RVC and own where I am, but at this stage to have a backyard and the quote unquote American dream of the house with the white picket fence [feels] out of reach," he said. "I both feel fortunate in ways and just disheartened because every year the bar keeps getting higher and higher."

The Collinses are seeking a three-bed, two-bath house with a backyard that is close to the Long Island Rail Road so Don can commute to his office in Manhattan several times a week and his wife, a voice-over artist, has more space to work at home. As their 4-year-old daughter prepares to enter kindergarten later this year, Collins said they feel pressure to find a house so she won't need to switch schools.

That urgency is bumping up against the high hurdle of home prices. Collins said many of the homes he and his wife are looking at cost more than $800,000, which he said "seems to be one of the most competitive pricing points."

A 20% down payment on a house with that price would be $160,000. With a 2% property tax rate and a 6.89% interest rate, monthly payments would be $5,544, according to the OneKey MLS mortgage calculator.

The couple recently put an offer down on a home in Suffolk listed at just over $790,000 and ended up bidding $855,000. Collins said they were told their offer was "way too low."

"Not a happy ending, but shows the reality," he said. "The competition is ridiculous, but we haven't lost all hope yet."

Prepare to compromise

Real estate agents and other professionals in the industry acknowledged the harsh competitiveness facing buyers on Long Island, and recommended that individuals need to make compromises or go above and beyond to secure a home of their own.

Debra Russell, a real estate agent at Daniel Gale Sotheby's International Realty who is working with the Baumanns, said she doesn't expect the housing inventory issue to resolve anytime soon. In the past, prospective sellers would start asking for agents to price their homes at the end of the prior year in time for the so-called real estate season, which starts in April and lasts into fall.

This year, homeowners have asked agents to price out their homes during the past two months with the intention of listing in summer. Russell said she's not sure these homes will hit the market then, because many homeowners question where they will move to and what they can afford.

These market conditions, along with higher interest rates, have left prospective buyers feeling "really beat up. I feel bad for these buyers. It's tough," she said. "There's so much competition. In my market [from the Brookvilles to Setauket] we used to see [20% cash down] buyers as ideal, but there's been so much cash out there now. So many people are willing to waive contingencies that it's hard for buyers."

To compete, Russell said buyers must know their finances and what they can afford.

The buyers who are achieving the winning bid or getting the house have gotten creative. They're asking family members for help. They're doing just whatever they have to do to get the deal done. ... The two words that we need to keep [in mind] are patience and flexibility."

— Debra Russell, a real estate agent at Daniel Gale Sotheby's International Realty

Dan Coscia and Julie Calabrese, agents with HomeSmart Premier Living Realty, echoed Russell's remarks and added they've been seeing instances of multigenerational families buying homes and moving in together.

"The buyers we're seeing are serious and they're creative," Calabrese said.

That creativity will likely involve compromises, according to Max Shatzkamer, of Glen Cove, a loan officer at Meadowbrook Financial Mortgage Bankers Corp. Prospective buyers, especially millennials, need to be open to the "functional, but dated" homes that may have out-of-style cabinets and wallpaper that are smaller than they like or outside their preferred location.

Something I see with people my age: people get fed up before they see the results of their hard work and relegate themselves to renting forever.

— Max Shatzkamer, loan officer at Meadowbrook Financial Mortgage Bankers Corp.

"People who want to buy a five-bedroom house and wait for five years, instead of buying the three-bedroom, lost a lot of equity potential in that time," he said. "You have to be open to different locations and housing types. Homeownership may not be attainable for people in certain areas."

On a more positive note, he said those millennials who are willing to take on a mortgage are already ahead of their peers. "Something I see with people my age: people get fed up before they see the results of their hard work and relegate themselves to renting forever," he said.

Wait it out and be prepared to fight

The current housing shortage has been around far longer than this post-pandemic period and will likely last for a long time, said Richard Murdocco, an adjunct professor at Stony Brook University's public policy graduate program who also studies economic development. He said infrastructure and environmental issues have made it challenging to increase the housing supply and provide millennials with more options. Don't count on it happening anytime soon, he added.

Expectations need to shift. The dollar does not stretch as far in the real estate market as it used to. I would not wait for rates to come down or more housing to be built. These are issues that have vexed us for decades now, if not more.

— Richard Murdocco, adjunct professor at Stony Brook University's public policy graduate program

The Baumanns and Collinses are keeping their options open, having loose deadlines in mind to either scale back what they'll accept in a home or looking at a different region entirely.

While the Collinses have some leeway because they own their co-op, Don said they're feeling outside pressure. His wife's parents moved to North Carolina and are urging them to follow, and he said many of his close friends have already left the Island. They're holding on to hope and will stick it out and keep trying, especially as Don's work is here, he said. Even though, he joked, "No matter how much avocado toast I give up eating, it's not getting any closer."

Caitlin Baumann said there's some things they're willing to compromise on, but insists on having enough space and a yard for her son and another potential child in the future. Still, she can't help but look at the affordability of other markets.

"It is hard to swallow how outrageous the market is here and be like, are we crazy? Why are we doing this?" she said. "Other than: We love it here and we don't want to leave."