Alec Orozco has been trying to buy his first home for the past year. <\/p>\n
The 21-year-old telecommunications worker in Sacramento, Calif. earns an annual salary between $80,000 to $100,000, depending on the year, but says he is still locked out of the housing market.<\/p>\n
\u201cIt\u2019s been a semi-depressing struggle,\u201d he told MarketWatch. Orozco is looking for a home priced around $300,000. \u201cEverything keeps going up: rates keep going up, insurance keeps going up, and making it more and more expensive to possibly own at some point.\u201d\u00a0<\/p>\n
Related:<\/strong> Home buyers flee the housing market as mortgage rates surge to the highest level since 2000<\/p>\n Orozco says he\u2019s lucky that he makes the salary he does, but expects he will be stuck renting for the foreseeable future because of high home prices and high mortgage rates. The 30-year rate is averaging around 7.5% as of August 22, according to Mortgage News Daily, and the median price of a resale home nationwide was well over $400,000 as of July.<\/p>\n \u201cEither the rates have got to go back down or the house prices have got to go back down,\u201d he said. Otherwise, he will \u201cprobably not\u201d be buying a house anytime soon. He added that the process of looking at houses right now is \u201cdefinitely discouraging.\u201d<\/p>\n Orozco is not alone \u2014 and there\u2019s even a new name for young adults giving up on home ownership.\u00a0<\/p>\n Meet the \u201cguppies.\u201d<\/p>\n Buyers across the United States have been grappling with high mortgage rates, high home prices and a low level of home listings, which have brought the U.S. housing market to a standstill. <\/p>\n The story is the same across the Atlantic. Like the U.S., the United Kingdom has seen housing prices spike since 2020, causing some younger potential home buyers to stop their searches.<\/p>\n Now, these Gen Z and millennial would-be homebuyers are being labeled \u201cguppies\u201d by real estate listings company Zoopla, as they are \u201cgiving up on property,\u201d despite sometimes still making decent money. \u201cGuppie\u201d is also a wordplay on the 1980s slang term \u201cyuppie,\u201d which referred to a young person with a well-paid job who could<\/em> easily afford to buy a home.<\/p>\n But young adults today are facing a much different economic landscape than adults their age did 40 years or so ago. <\/p>\n According to a recent survey from Zoopla, 38% of U.K. adults under 40 earning \u00a360,000 ($76,000) who don\u2019t own a home have given up on purchasing one in the next decade. The average salary for a full-time worker in the U.K. is just shy of \u00a340,000 ($51,000), according to the Office for National Statistics.<\/p>\n For these adults under 40, just one in five (21%) surveyed say they will \u201cdefinitely\u201d be able to buy a home in the next 10 years. Some of the most popular reasons why people say they won\u2019t be able to buy a home include the cost-of-living crisis, increasing house prices and higher mortgage rates.\u00a0<\/p>\n When MarketWatch recently surveyed Instagram followers to find out what was keeping many of them from buying a home, difficulty saving up enough for a down payment was the most common response. <\/p>\n \u201cRenting but can\u2019t afford to step on the property ladder due to requested deposit amount,\u201d wrote in one reader. <\/p>\n \u201cI make just under six figures and can\u2019t afford a home,\u201d added another, agreeing that the down payment is \u201cthe biggest hurdle.\u201d<\/p>\n See also<\/strong>: Housing market has hit \u2018rock bottom,\u2019 says Redfin CEO Glenn Kelman<\/p>\n Housing prices surged in the U.S. since the coronavirus pandemic, pricing many Americans out of homeownership. The median price for a U.S. home peaked in June last year at $413,800, and estimates suggest that after property taxes and insurance, a person would need to make over six figures to afford that median-priced home.<\/p>\n <\/p>\n Rami Sleiman has been looking to buy a home for the last month. The 33-year-old and his wife put in four offers on homes in Florida, but they all fell apart due to one issue or another.<\/p>\n Sleiman, a healthcare executive who is looking for single-family homes in Parkland and Boca Raton priced within $700,000 and $800,000, told MarketWatch that he regretted not buying four years ago when he first wanted to. He had believed home prices would crash at the time, so he waited. \u201cBut I actually got bit by it \u2014 home values have increased by astronomical levels since,\u201d he said, and rates have hit 22-year highs.\u00a0<\/p>\n \u201cI\u2019m actually in a worse situation now,\u201d he added.<\/p>\n Other young, would-be homebuyers have also told MarketWatch that the process of trying to find an affordable home has been \u201cdemoralizing.\u201d\u00a0<\/p>\n See also<\/strong>: Mortgage rates could hit 8%, economists say, citing a worrying sign not seen since the Great Recession<\/p>\n Yet some have pulled through, despite nearly giving up like the guppies. <\/p>\n Cassie Nilsson, 31, and Oliver Nilsson, 29, started looking for homes in March 2023, and recently bought a condo in Tarpon River, Fla. They spent nearly $300,000 on their one bedroom condo, secured a 7% interest rate, and are in the process of moving into their new home with their two dogs.<\/p>\n <\/p>\n Even their real-estate agent was ready to throw in the towel during the house-hunting process. \u201cI almost gave up with Cassie \u2026 it was so hard\u2026. just for a one bedroom you\u2019re looking at [a price range of] $300,000 to $350,000,\u201d said Donna Incorvaja, a Fort Lauderdale-based agent with RelatedISG Realty, who helped the Nilssons find their condo. She told MarketWatch that prior to 2020, however, you could get that same type of property for $250,000.<\/p>\n Yet many young adults choosing to rent for longer, given the difficulties in buying a home, are still paying plenty of money. <\/p>\n Rising monthly rent is one of the biggest drivers of inflation in America. Real estate marketplace Zillow said in its May rent report that the typical asking rent price was $2,048 per month, a roughly 27% increase from the typical U.S. rent of $1,607 in March 2020.<\/p>\n Read on: <\/strong>A complete guide to buying your first home<\/p>\n One of the biggest reasons why some young people are still able to purchase homes despite these economic challenges is thanks to the \u201cbank of mom and dad.\u201d\u00a0<\/p>\n Whether it is getting assistance from their parents in the form of a down payment, or living with parents to save up their own down payments, many would-be homebuyers under 40 are not afraid to ask their parents for a helping hand.<\/p>\n In the U.S., non-homeowners under 40 are in fact more likely to be living with their parents (14.4%), than they are planning to buy a home, or be in the process of owning one (14.1%), according to Zoopla. <\/p>\n In the U.S., 14% of Americans say they don\u2019t plan on becoming homeowners, per an April Zebra survey.<\/p>\nThe \u2018guppies\u2019 who can\u2019t buy a home<\/strong><\/h2>\n
Persistence paid off for some near-guppies<\/strong><\/h2>\n
Tapping the \u2018bank of mom and dad\u2019<\/strong><\/h2>\n