How Homeownership Split a Generation

For millennials, getting on the property ladder at the right time is becoming the single biggest factor in building wealth – and those who missed the boat are falling far behind. New data from the German Bundesbank shows that only 7% of households headed by someone under 35 owned their own home in 2023. Their median net wealth sat at just €17,300, with about 11% carrying more debt than assets. In contrast, German households that already had a mortgage held a median net wealth of €379,900, and those who had paid off their home reached €450,200.

The same pattern holds in the United States. A study from the Federal Reserve Bank of Minneapolis found that only 22% of adults under 35 personally owned a stake in a property in 2024 – far lower than the 37% suggested by traditional household-level statistics. The gap primarily stems from young adults living in a parent’s or partner’s home without being listed as an owner. Meanwhile, older millennials who bought years ago have seen their equity swell, contributing roughly $2.5 trillion of a $12 trillion increase in total millennial net wealth between 2019 and the end of 2024.

The economic mechanism is straightforward: each mortgage payment builds equity while the property often appreciates. That forced saving is invisible to renters, who must voluntarily set aside money to invest. Without family help for a down payment – children of homeowners are far more likely to buy, according to Germany’s DIW institute – many younger millennials are locked out even when they earn well.

Inside the Homeownership Wealth Divide

The German Wealth Divide in Hard Numbers

In Germany the renter-owner chasm is striking. Median net wealth for renter households in 2023 was €18,300, against €379,900 for those with a mortgage. The difference persists even after adjusting for income, because home equity accumulates automatically while renters must actively save and invest to keep pace. The only way renters can match an owner’s wealth trajectory is to invest the equivalent of mortgage interest and upkeep costs in assets like equities – a discipline few households maintain.

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A Statistical Rethink in the US

The Minneapolis Fed’s person-based measure challenges the conventional wisdom about young homeownership. By counting only individuals who hold a direct ownership stake, it strips out adults who live in an owner-occupied household without any equity claim. That 15-percentage-point gap means many young adults are, in reality, renting from their relatives. Nationwide, 13.9% of all adults live in someone else’s owner-occupied home, and 9% are adult children in their parents’ house. This “hidden renting” delays genuine wealth building for a significant share of millennials.

Family Background Decides the Race

The DIW research makes clear that parental support – whether cash gifts for the deposit, a guarantee, or a future inheritance – is a powerful predictor of homeownership. For those without such backing, the entire purchase must be funded from earned income, which often falls short in high-priced cities. Even with a good salary, the equity hurdle in Munich or other expensive metros can be insurmountable. The 2026 drop in first-time buyers to just 21% of the U.S. market, according to the National Association of Realtors, underscores how this dynamic is pushing entry further into the future.

Where Affordability Still Exists

Calculations by Interhyp and the German Economic Institute (IW) suggest that the affordability of homeownership improved slightly by April 2025, but the recovery is uneven. In many rural districts a purchase is still within reach for an average earner. In Germany’s most expensive cities, however, even dual-income professional households often fail to meet the equity requirements. Similarly, the Minneapolis Fed data shows that the share of 25-year-olds owning property fell from 20% in 2006 to 12% in 2015 and only recovered to 14% by 2024 – a sign that delayed entry may simply prolong the renter phase rather than being compensated later.

What Renters and Would-Be Buyers Can Do Now

For those currently locked out of the housing market, several concrete steps can narrow the wealth gap, based directly on the data:

  • If family support is an option, explore co-ownership or a parental guarantee to clear the down-payment barrier. The DIW findings confirm that such intergenerational help dramatically increases the odds of buying.
  • Without family assistance, consider moving the search to a lower-cost region. Interhyp’s regional data shows that in many rural German districts a median earner can still afford to buy – something rarely true in Munich or Frankfurt.
  • Treat renting as a conscious wealth plan, not a fallback. Invest the monthly difference between your rent and an equivalent mortgage payment (including interest, maintenance and insurance) in a low-cost diversified equity fund. Historical data suggest this approach can produce comparable or even higher net wealth than forced home equity, but only if executed with strict discipline.
  • Look beyond household-level statistics. The Minneapolis Fed’s person-based measure reveals that many young adults have no ownership stake despite living in an owned home. Make sure you are building assets in your own name, especially if living with a partner or parents.