The decision to own a home has long been seen as the pinnacle of the American Dream. It has historically symbolized stability, success, and a pathway to building long-term wealth. Yet for many, that dream looks different today. Shifting priorities and demographics, combined with rising prices and higher interest rates, have led younger generations to delay or even forgo homeownership altogether.
One glaring reason for the delay or absence of homeownership is affordability. Since 2020, home prices have risen nationwide by 47%.[1] This makes it even more challenging for younger professionals to consider homeownership, and the data bears this out: As of 2024, 80% of Baby Boomers own homes, versus only 55% of Millennials. [2] However, even for those who can afford to buy, ownership is not always the top priority. The number of households earning more than one million annually that are renting in Berkeley, Oakland, and San Francisco quadrupled from 2020 to 2022, and tripled nationwide in that timeframe.[3]
The traditional path is being redefined, so while many can afford to own, this is no longer the default choice.
Evolving Landscape of Homeownership
Some of the reasons for the declining homeownership rates are not surprising: prices are higher, borrowing costs are steeper, and income has not kept pace with real estate growth. Yet there’s more to the story. Modern lifestyles and investment choices have expanded what financial success looks like.
For decades, homeownership was one of the few accessible paths to building wealth. Today, investors can create a diversified portfolio through low-cost ETFs and mutual funds – an option that didn’t exist in the same way a generation ago. That path provides a way for individuals to build wealth without owning a home, and to prioritize flexibility, travel, or remote-work lifestyles that don’t easily pair with maintaining property.
Millennials are also the most educated generation in history, and that investment in education tends to push other milestones – marriage, children, and first-time home purchases – further into adulthood. The median age of a first-time buyer is now 38 years old, and it is even higher in expensive metropolitan areas. Family composition also plays a role: 62% of recent buyers were married couples, 20% were single women, 8% single men, and 6% unmarried couples.[4] Buying solo often means waiting longer to build the necessary savings.
An increasing number of people are intentionally choosing financial flexibility over a long-term mortgage commitment. Delaying homeownership is not a setback, but a strategy.
A Personalized Path
I personally purchased solo, and it was about more than numbers. Growing up in the Bay Area, I wanted to put down roots where I’m from in a safe place I could call my own, without sacrificing the ability to live my life fully by enjoying time with family and friends, travelling, and pursuing the hobbies I love.
My journey was a years-long decision that was guided both by my financial numbers and my personal values.
When I finally purchased my first home, I intentionally stayed well under my approved mortgage limits. I chose a smaller house in a nearby suburb, shifting from the more urban neighborhood that I originally envisioned. My family also has a background in construction, which gave me the confidence to look at fixer-uppers and renovate within my budget. While this process required patience and careful savings, it meant I could keep my financial freedom: the freedom to enjoy life, to go back to school, and change my career path if I wanted (which I did) without feeling trapped by a large mortgage payment.
My house has everything I need, most of what I want, and – most importantly – it’s affordable enough that I can still enjoy my life. My goal of being near family and friends would have been meaningless if I couldn’t afford to enjoy their company.
Understanding Your Motivations
Whether to buy or rent is as much an emotional decision as a financial one. The most important step is to focus on your own goals and tune out the societal pressure that assumes everyone should buy or reach life milestones in a particular order.
For some, buying a home in a certain area offers emotional grounding or access to good schools. For others, the appeal is financial, with a goal of building equity and long-term wealth. There are also those for whom flexibility is paramount, and renting carries more advantages.
None of these choices is right or wrong; what matters is alignment with your personal circumstances and values.
Can I Afford to Buy?
As a starting point, financial planners suggest keeping total housing costs, including mortgage, property taxes, insurance, maintenance, and any HOA fees, at or below 30% of gross income. If you’re currently renting within that range, your mortgage should fit comfortably at a similar ratio. Property taxes and mortgage interest may be partly deductible, so factoring those in can help refine your number.
Realistically, there are always personal tradeoffs and nuances to consider. If your primary goal is investment growth, the stock market historically outperforms real estate over long periods. If you value liquidity or expect to relocate, renting could make more sense. Alternatively, if stability, community, or the satisfaction of having your own space matter most, ownership may be worth the trade-offs, even if the financial return is comparable.
It’s also important to account for the time and effort that ownership requires. Maintenance and repairs can be costly and physically demanding. Some people enjoy the responsibility; others prefer to leave it to a landlord and invest their energy elsewhere.
Making Your Decision
Once you know your motivations and determine that buying is financially realistic, timing and approach come next.
One of the first considerations is household income. In some cases, we work with individuals who have had prosperous careers in the technology sector, but want to spend the second half of their career working for a nonprofit. For them, we help project what affordability looks like based on future income, not just today’s.
We also work with households that have ample savings but are waiting for the right conditions to make the investment “worth it”. Some of these individuals view real estate as one piece of a larger investment picture and prefer to wait until prices, rates, and personal readiness align. The decision to rent or delay buying does not represent indecisiveness, but rather patience as a financial strategy. Alternatively, many choose to delay buying a home to prioritize travel or perhaps wait to purchase later in a hometown where they’ll eventually raise children.
In each of these examples, the trade-offs are highly personal. At North Berkeley, our team works with clients to model various scenarios for renting or buying, including different timelines and amounts, so they feel confident taking the next step in this big decision.
Knowing What’s Right for You
Every situation is unique, and for most people, housing decisions change over time. Renting and buying both offer different advantages, and there is no single prescribed path. Today’s lifestyles are far more diverse, and that’s a good thing.
Our team helps clients evaluate these choices – balancing the emotional pull of buying or renting with the other priorities in their lives. A home can be a meaningful part of your financial plan, and it should serve your life, not define it.
Resources
[1] Home Prices Far Outpace Incomes. Harvard University Joint Center for Housing Studies
[2] Gen Z and Millennial Homeownership Rates Flatlined in 2024 As Housing Costs Soared. Redfin
[3] More rich people in San Francisco are choosing to rent. Axios
[4] 2025 Home Buyers and Sellers Generational Trends Report. National Association of Realtors
