It's not secret that housing is expensive, but what’s less apparent is thewidening financial gapbetweenexisting homeownersand those looking to gain a foothold in the market.
Since the COVID-19 pandemic, the U.S. housing market has fractured into two,mirroring the broader K-shaped economy. On one side are the new buyers, paying a record premium to enter the market; on the other are existing homeowners, whose housing costs—as a share of income—are at near-record lows.
At first glance, it's not surprising that new homeowners, who tend to be younger and earlier in their careers, are expected to set aside a greater portion of their earnings toward housing costs as they contend with present-day elevated home prices andmortgage rates, resulting in highermonthly payments.
But according to a new study by theEconomic Innovation Group, aWashington, DC–based bipartisan public policy organization, whatissurprising is that the "entry fee" for novice buyers has skyrocketed since 2020, creating a staggering cost disparity.
Jess Remington, research analyst at EIG and the author of the analysis, writes that the difference of nearly 7 percentage points between the two groups is the largest in nearly 40 years.
Remington points out that, while new owners were spending 28% of their income on housing at the peak of the housing bubble in 2007, the gap with existing homeowners was narrower then, at just 4 percentage points.
"Even at the height of this century’s other housing affordability crisis, the housing cost burden was less unequal," writes the analyst.
This dynamic helps explain why homeownership among younger Americans has been on a downward trajectory for decades.
An Urban Instituteanalysisfrom March 2025 found that the homeownership rate for 35- to 44-year-olds has fallen by more than 10 percentage points since 1980.
Meanwhile, theNational Association of Realtors®reported last year, based on survey data, that the median age of first-time buyers had jumped to 40, the highest on record.
Source: Drudge Report
