Meet the middle-aged millennial: Homeowner, debt-burdened and turning 40

As millennials begin to turn 40 in 2021, CNBC Make It is launching Middle-Aged Millennials, a series exploring how the oldest members of this generation have grown into adulthood amidst the backdrop of the Great Recession and the Covid-19 pandemic, student loans, stagnant wages and rising costs of living.

Travis Jang-Busby is a married lawyer with two kids and a three-bedroom house near San Diego.

This isn’t the setup to a 1960s sitcom. It’s 2021, and Jang-Busby, 34, is a pretty typical millennial: a home-owning family man who’s paying down six-figure student-loan debt and is looking to invest more in his retirement account. And he can’t remember the last time he bought a latte.

Millennials have been dogged with the stereotype that they are perpetually young, unmarried and financially irresponsible. That’s not the reality, however, especially as the oldest millennials turn 40 this year.

One of the more persistent tropes is that millennials are still a generation of renters. However, a significant number now owns a home. Among older millennials — those born between 1981 and 1988 — 59% are homeowners, a recent survey conducted by The Harris Poll on behalf of CNBC Make It showed. The survey polled 1,000 U.S. adults ages 33 to 40 around a number of topics, including homeownership, student loans, employment and financial security. 

Most older millennials have owned their home for several years. Over half of them purchased their home more than five years ago, while about 40% have owned their home for one to five years. Roughly 5% of older millennials say they’ve made a home purchase in the past year.

Yet the road to homeownership for this generation hasn’t been without sacrifice. Jang-Busby purchased his home for just under $450,000 in 2015. Even though he and his wife are lawyers, juggling the cost of housing with major expenses such as student loan payments and child care meant he couldn’t start saving for retirement until about three years ago. And these kinds of trade-offs aren’t uncommon.

Many older millennials, including Jang-Busby, had to get creative when paying for their home. About 10% reported taking a loan from their retirement accounts, while roughly 20% used a credit card to help with purchase and closing costs, including the down payment. Nearly 1 in 5 older millennials also received help from their parents or other family members in funding the purchase of their home.

“When it comes to achieving homeownership, older millennials were just scrappy and very resourceful,” says Harris Poll CEO John Gerzema.

Jang-Busby’s mother and mother-in-law chipped in to help cover the down payment following last-minute issues with their original lender.

“We had to be very resourceful,” he says. Ten days before the couple was set to close on their house, their original lender told them they could no longer do a 10% down payment as originally promised and needed to put down 20% of the roughly $450,000 home price. The couple switched lenders, but with the clock ticking, their parents stepped in to help make up the difference in what their savings would not cover. 

“If we had come out [of school] with good jobs, it wouldn’t have been an issue,” Jang-Busby says. He graduated from college in 2008, at the start of the Great Recession and had to take “odds-and-ends jobs” because he wasn’t able to find full-time, decent-paying work. 

Jang-Busby decided to go to law school in 2010 after gig work wasn’t enough to pay the bills. He graduated in 2012, entering a legal industry that was in a downward spiral. He made about $20 an hour when he started work as an attorney, while his wife worked for her mom for a few years. 

The couple eventually scraped together enough to purchase a home, but Jang-Busby expected it to be easier.

“I come from a middle-class family where we thought law school was the winning ticket,” he says. “I had the expectation that I was going to come out of law school and be able to pay my loans, but that was not the reality.” Despite moving up the legal ladder and becoming a partner in a firm, he still owes about $150,000 on his student loans. 

“At graduate-school prices, it’s seriously like credit card debt. I’m paying aggressively now, but that obviously affects what I can spend on housing, family and leisure,” Jang-Busby says. 

However, he added that buying a home was worth it. “I don’t really regret allocating the funds to buy a house over, say, investing more in my 401(k) because the value of our house has appreciated over time, and it was important for our autonomy and our development to have a house.”

Although most older millennials have managed to become homeowners, about 28% still rent. Another 12% are living with their parents or other family members. Homeownership rates among Black and Hispanic older millennials lag their white counterparts, as do rates among those who don’t have a college degree. Overall, homeownership rates among older millennials are also lower than those of older generations.

Last year, the homeownership rate among older millennials ages 33 to 39 was 53.8%, according to an Apartment List report, which uses calculations based on an analysis of the Census Bureau’s Current Population Survey. By comparison, about 60% of Gen X owned homes at the same age and 62% of baby boomers. 

Debt has been a key factor hindering home ownership among millennials. About 17% of older millennials who don’t own a home say student loans present a barrier to achieving homeownership, according to the CNBC Make It-Harris Poll survey. And half of older millennials say they’re not homeowners because they don’t have enough saved. 

“With higher debt, it became more difficult for millennials to save,” says Jung Hyun Choi, a senior research associate with the Housing Finance Policy Center at the Urban Institute. Those in their 30s with student loans owe an average of $40,500. She notes that student loan debt also affects debt-to-income ratios, which can make it harder to qualify for affordable mortgages.

Lower savings rates among older millennials are also the result of the tough job market they faced as they entered adulthood during the Great Recession.

“At that time, the unemployment rate was significantly high, so it meant that a lot of them faced difficulty finding jobs,” Choi says, adding there’s a lot of research showing young adults who graduated during a recession see a long-term negative impact on their earnings. 

Those ages 18 to 34 during the Great Recession in 2008 suffered double-digit unemployment rates for almost six years, according to a 2014 report from the nonprofit Young Invincibles. Between unemployment and repressed wages, Young Invincibles estimated the recession cost young workers more than $22,000 in earnings. 

Adding to older millennials’ relative difficulty buying a home was a marked tightening of credit, according to St. Louis Federal Reserve economists Bill Emmons.

The new restrictions put in place by the 2010 Dodd-Frank legislation — as well as hesitation by lenders to take the kinds of risks that were typical before the housing crash — made it harder to get a mortgage, Emmons says. “The underwriting process for mortgage lending changed a lot from the pre- to the post-bubble period — and it would be groups like young people who would be most affected by that.”

There is early anecdotal evidence that the Covid-19 pandemic has spurred a growth in homeownership rates in the U.S., but perhaps not among older millennials. Only about 5% of older millennials bought a home in the past year, according to the CNBC Make It-Harris Poll survey.

While the majority of older millennials have bought homes, Choi notes that if homeownership rates among this age group continue to lag previous generations, it could negatively impact their own and their children’s financial stability.

“Having a home does not just give you an opportunity to access wealth and build wealth, but it also gives you more stability,” she says. Many baby boomers and those in the silent generation —  people born from 1928 to 1945 — have already paid off their mortgage, so they don’t have to worry about monthly housing costs later in life.

Those who rent, on the other hand, have to find a way to pay for housing even while potentially earning a lower income during retirement, Choi says. Rent costs can also be more volatile than the fixed expense of a mortgage. “It indicates a lot of the future seniors may face more unstable conditions than the current seniors.”

Future generations may also be affected, Choi says. Previous research shows homeownership is more likely if someone’s parents owned a home. But if more millennials continue to rent than previous generations, it could mean more of their children will do the same. “This trend might not just affect the current millennial generation, it might also affect their children moving forward.”

That’s not to say this generation’s fate is set in stone, Emmons says. An optimistic way to look at this is that millennials’ ability to hit major life milestones — getting married, having children, buying a house — has been delayed rather than permanently eliminated. 

“If it’s just a little bit of a delay, then maybe it’s not such a problem. Particularly if people are living longer, if they’re working longer or staying healthy longer, perhaps it’s not necessarily all bad,” Emmons says. 

For Andres Morinigo, 35, homeownership is an outdated measure of success. “If you told me when I was a kid, you’re going to be 35 and still renting, on paper, that doesn’t sound very successful. But I’ve built wealth in other ways to have savings and investments. I think that there’s a different set of expectations that just don’t apply to what we thought was going to happen 20 or 30 years ago,” he says. 

That’s not to say Morinigo, who makes $225,000 a year overseeing customer relations for a software company, has never thought about homeownership. It just doesn’t make sense for him right now. “I’m not really looking to flee to the suburbs and live in a four-bedroom house by myself,” he says. He currently rents a one-bedroom apartment in Manhattan for about $2,400 a month.

“Owning makes sense if you know you’re going to be there long term. I love New York. I’ve been here almost 10 years now. But with everything going on, I’m thinking that I may stay here another five or 10 years, and then maybe I can go somewhere else,” he says. 

That’s not to say homeownership is completely off the table. Morinigo says that as he approaches 40, he hopes to continue to build his career, be successful and perhaps find a partner. 

“What people my age have learned is there’s a certain amount of grit and tenacity that you need to succeed,” Morinigo says. “Our generation has had to endure some challenges that maybe made it a little tougher to succeed. But if you have that grit and tenacity, you find a way.”

CNBC Make It will be publishing more stories in the Middle-Aged Millennials series around student loans, employment, wealth, diversity and health. If you’re an older millennial (ages 33 to 40) and interested in sharing your experiences, please email senior reporter Megan Leonhardt at megan.leonhardt@nbcuni.com.