The millennial generation has split, new Fed research shows: those over 35 are edging toward boomer-style wealth, while everyone else falls behind - Fortune

For two decades, the U.S. homeownership rate has been treated as a scoreboard of generational progress—even as the topline number has barely moved and hides a widening age-based split beneath it. New research from the Federal Reserve Bank of Minneapolis suggests the story may actually be one of reversal, not stasis—with a significant split along generational, even intra-generational lines.

The Minneapolis Fed’s new measure, called the homeowners-to-population ratio, or HPOP, counts individual adults rather than housing units. There’s quite a difference from the traditional owner-occupancy rate: the former puts national homeownership at 65%, but HPOP finds the real figure is closer to 53%. For adults under age 35, the gap is even more severe. The standard rate says 37% of under-35 households owned their home in 2024; HPOP puts the true number at just 22%.

The traditional 37% figure only reflects household heads—”about a third” of all adults under 35, one of the researchers, Erik Hembre, told Fortune. Once every adult in that age group is counted, the rate “drops down to 22% for everyone under the age of 35,” he said. “That seems like a meaningful difference to me.”

“More than one in 10 U.S. adults live in owner-occupied homes without actually being owners themselves,” researchers Hembre, Benjamin Horowitz, and Maxine Xu found, pegging the figure at 13.9% nationally. That’s because the old measure only checks whether a housing unit’s owner lives there—it says nothing about the adult children, roommates, or aging parents who also live under that roof without owning any stake in it.

Hembre said one figure inside that number surprised even him: 9% of all U.S. adults 18 and older live in an owner-occupied home as the child of the owner. “To me, that’s a big number, and I didn’t know it was that large beforehand,” he said.

And that blind spot isn’t evenly spread across age groups: It falls hardest on the young, since they are disproportionately the ones living in homes their parents or partners own, which is exactly why the under-35 homeownership rate has looked so much healthier than reality for years.

A cul-de-sac illustrates the illusion

The Minneapolis Fed researchers illustrate the distortion with a hypothetical five-house cul-de-sac. Owner-occupancy there reads as 80%, since four of five houses have an owner living inside. But once you count all 14 adults living on the street, only half actually own a home. The rest are grown children, partners, or extended family folded into someone else’s ownership statistic.

The new measure also captures people the old one ignores entirely—including nursing-home residents and students in dorms, who don’t show up in owner-occupancy data at all. And it reveals just how bad the youngest cohort’s trajectory has been over time: HPOP for 25-year-olds fell from 20% in 2006 to a low of 12% in 2015, and has recovered to just 14% by 2024–nowhere near pre-financial-crisis levels, despite recent headlines suggesting a young-adult homeownership rebound.

Hembre cautioned against reading too much doom into the youth numbers alone.

“It’s still true that most people, a majority of people, become homeowners at some point,” he said. “Our younger generation is still young. We don’t quite know what the future holds for them yet.”

However, the data does suggest that “at some point” is arriving later than it used to, and later than the standard 35-year cutoff might imply. He said it’s “completely reasonable” to look at other dynamics changing in the economy—an aging society, medical advancements leading to longer lifespans—and conclude that youth now lasts well into the mid-30s, in terms of homeownership.

At one point in our interview, I asked Hembre if he was a baseball fan, and he quickly said yes, and then didn’t disagree when I pointed out that his HPOP research resembles the invention of a stat called on-base percentage. Batting average was just about base hits, it simply didn’t measure the core goal of getting on base as well as the metric that included drawing walks—just like HPOP actually measures the head of household who also owns a home, instead of technically living inside an owned home.

“It’s why stats need to line up with what it is you care about as the outcome,” he said. “I’m not saying the old measure was wrong—batting average is still used,” he said. “But we think that this is an improvement.”