As soaring mortgage rates and home prices price young Americans out of the housing market, a new generation is increasingly turning to the stock market to build wealth. What this really means is that the American dream of homeownership is slipping further out of reach for Gen Z, forcing them to seek alternative paths to financial security.
The Shift Toward Investing
Recent data from JPMorgan Chase Institute reveals a staggering shift in the investment habits of 25-year-olds over the past decade. In 2015, just 6% of this age group were adding funds to retail investment accounts. By 2024, that figure had skyrocketed to 37% - a sixfold increase.
The bigger picture here is that young Americans, largely priced out of the overheated housing market, are redirecting their savings toward stocks and other financial assets as a means of building wealth. As Business Insider reports, "the housing market has long been a core asset for most households. However, fewer young individuals are becoming first-time homebuyers, while the investing population has moved sharply in the opposite direction."
A Bleak Outlook for First-Time Buyers
This trend is part of a broader shift in the housing landscape, where the number of first-time homebuyers has plummeted to historic lows. Fortune reports that the number of first-time buyers shrank from nearly 3.2 million in 2004 to just 1.14 million in 2024 - a staggering 64% decline. With mortgage rates still hovering near 7% and the median home price topping $422,000, the American dream of homeownership is increasingly out of reach for younger generations.
The implications of this shift are significant. As more young people turn to the stock market to build wealth, it could have far-reaching consequences for the housing market, the economy, and the long-term financial security of an entire generation. The question is whether policymakers and industry leaders can find ways to make homeownership more accessible and affordable for those who have been priced out.