Realtor Explains Why Being Middle Class Is So Much More Difficult For Millennials And Gen Z Than Any Other Generation
Millennials and Gen Z face housing difficulties other generations have never experienced.
Perfect Wave | Shutterstock The economy might be looking up to analysts and finance professionals, but to anyone living in the middle class, the truth of day-to-day life feels much bleaker. This is especially true for millennials and Gen Zers grappling with astronomical housing costs on top of everything from daycare expenses to student loan debt.
Freddie Smith, a seasoned realtor, took to TikTok to paint a stark picture of the growing divide within the middle class, especially for millennials and Gen Z. Using a comparison of neighboring homeowners from different generations, he highlighted the massive gap in housing expenses.
A realtor explained the growing divide impacting the middle class, specifically millennials and Gen Z homeowners.
For boomers, who purchased homes decades ago, a $400,000 property is often fully paid off, leaving them with minimal monthly expenses. With just $700 in property taxes and insurance, they can afford to live comfortably without the added burdens of daycare or college tuition.
On the other hand, Gen Xers, who bought their homes 5-10 years ago, still benefit from lower interest rates and better pricing but face significantly higher costs with mortgage payments of around $1,500 a month and additional costs for raising children and paying for college tuition, their "big three" expenses — housing, childcare, and education — total around $2,000 per month.
But it's millennials and Gen Z, the younger generations, who are hit hardest. As Smith explained, home prices have skyrocketed in the past few years, with new buyers facing steep mortgage payments that often exceed $3,000 a month. These increases, combined with the costs of daycare and student loans, create a financial strain that older generations simply don’t experience in the same way.
Millennials and Gen Z need more money to survive.
The difference in expenses isn’t just about housing — it’s about the complete picture of living costs. For millennials and Gen Z, the "big three" — housing, childcare, and education — can easily total $6,000 a month or more. With daycare for a single child often costing $1,500 or more and the burden of student loans (often more than $800 a month for two degrees), the financial gap between these younger generations and their predecessors becomes evident.
Smith emphasized that to live in the same neighborhood with the same quality of life, millennials and Gen Z need a substantial income boost. Where boomers can get by with around $50,000 a year, and Gen Xers need closer to $75,000, younger generations need a whopping $150,000 annually just to cover the basics.
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This higher cost of living puts millennials and Gen Z in a difficult position. While wages have not kept pace with rising costs, many of these younger individuals are burdened with student debt and the cost of childcare, which continues to climb. Add in the inflated housing market — where the price of homes has far outpaced wage growth — and it becomes clear why this generation struggles more than any before it.
A 2024 study from Harvard’s Joint Center for Housing Studies found that the costs of single-family homes in 2023 were about 4.9 times the median household income, and U.S. homeownership only increased by 0.1% in 2023, which was the smallest increase since 2016. Basically, younger people can't afford homes and are simply being priced out of the market.
The financial pressures faced by millennials and Gen Z are not just personal struggles; they’re creating a ripple effect throughout the economy.
As these younger generations find it harder to achieve financial stability, fewer are able to save for retirement or invest in the economy in the same way boomers did. This results in a slower-growing economy, as younger workers are often forced to spend the majority of their income on basic necessities, decreasing consumer spending.
Freddie’s analysis highlighted a critical point: The middle class, once a cornerstone of the American Dream, is facing a crisis of affordability. While the previous generations were able to build wealth over time — through homeownership, education, and career growth — millennials and Gen Z are struggling to keep their heads above water.
The economic challenges faced by these generations are compounded by rising inflation, stagnating wages, and an unpredictable housing market. For many, the dream of owning a home or securing a comfortable future is slipping further out of reach.
In essence, Freddie Smith’s insights point to a larger issue — the systemic factors that make it increasingly difficult for millennials and Gen Z to thrive financially. The middle class, once a symbol of upward mobility, is being squeezed by forces that were largely absent during the lives of boomers and Gen Xers. Until the broader economy addresses these disparities, the American Dream may remain an illusion for many younger individuals.