Delayed Family Formation Impact on Housing Demand

Overview

Three interconnected demographic trends are reshaping U.S. housing demand:

• Declining fertility: The U.S. total fertility rate fell to 1.60 births per woman in 2024, well below the 2.1 “replacement rate”
• Older first-time mothers: The mean age of first-time mothers continues to rise — 27.5 years in 2023, up from 24.2 in 1990
• Older first-time homebuyers: The median age of first-time homebuyers has increased from 28 to 40 since 1990, per NAR survey data*

* Government mortgage data (NY Fed, FHFA) shows median first-time buyer age of 32–33, essentially flat since 2016. The difference reflects survey methodology and the growing share of cash purchases invisible to mortgage data. See chart note and Methodology section below.

Delayed Family Formation Trends (1990–2025)

Key Observations

Context & Discussion

Wealth transfers and the bifurcating housing market

An estimated $84–105 trillion in wealth will transfer from the Baby Boomer and Silent generations to their heirs over the coming decades, according to Cerulli Associates and Federal Reserve Survey of Consumer Finances data. Of this total, approximately $17–19 trillion is held in home equity — derived from Federal Reserve Financial Accounts data on homeownership rates and median home equity by age cohort.

This transfer is already reshaping the first-time buyer landscape. The 9% of first-time buyers who pay cash (per NAR’s 2025 survey) represent a population that is largely invisible to government mortgage tracking but fully visible to NAR — and their presence in the NAR sample pulls the reported median age upward. As the Boomer generation ages and mortality rates increase, the pace of wealth transfer will accelerate, and the share of home purchases funded by inheritance or family gifts will likely grow.

The result is a housing market that is bifurcating along wealth lines. On one track, mortgage-dependent first-time buyers — still the majority — face the affordability constraints documented in CRE42’s Home Affordability Crisis analysis: median home prices up 95% from 2011 to 2022, mortgage rates that doubled from 2021 to 2023, and student debt burdens averaging $37,000 per borrower. On the other track, a growing minority of equity-rich buyers can bypass the mortgage system entirely, paying cash and compressing time-to-close in ways that further disadvantage financed buyers in competitive markets. This wealth-driven bifurcation is likely to intensify as the volume of Boomer estate settlements grows over the next decade.

Multifamily demand: extended rental periods

The combined effect of delayed family formation, rising homebuyer ages, and declining fertility creates sustained structural demand for multifamily rental housing. The multifamily demand window has widened at both ends: younger adults are entering rental housing later (as student debt and credential inflation extend education timelines) and exiting later (as homeownership becomes less accessible in their late 20s and early 30s). For the mortgage-dependent majority, government data suggests rental demand remains structurally supported through age 32–33 — essentially unchanged from the prior decade. For the growing cohort priced out of ownership or choosing to delay, rental demand extends well into the mid-to-late 30s. And for individuals in high-cost metros where median home prices far exceed national figures, rental tenures extending into the 40s are increasingly common. The U.S. Demographics page documents how the 72-million-strong Millennial generation, with approximately 46 million currently in the 30–39 age range, creates an estimated 19 million units of additional rental demand beyond what would have existed if homebuying patterns had remained at 2008 levels.[3]

Potential for multifamily demand softening in the 2030s

The structural tailwind supporting multifamily demand is not permanent. The U.S. population aged 20–39 — the prime rental cohort — peaks at approximately 92.8 million around 2028 and then begins declining as the large Millennial birth cohorts (born 1986–1996) age out of this bracket and are replaced by smaller Gen Z and Gen Alpha cohorts born during the post-2010 fertility decline. Under a zero-net-immigration scenario, the 20–39 population declines by approximately 2.4 million from its peak to 2035, with the pace of decline accelerating thereafter as cohorts born at a TFR of 1.6 or below become the primary entrants.[4]

Simultaneously, Boomer mortality will begin releasing single-family housing inventory back into the market. As Boomers move to senior living facilities or pass away, the homes they occupied — many in established suburban neighborhoods with the school access and space that families prioritize — will become available to Millennials who have been renting through their 30s. This combination of freed inventory and easing price pressure could accelerate the transition from rental to ownership, pulling demand forward from the multifamily sector. Gen Z, at approximately 69 million (roughly 4% smaller than the Millennial generation), represents a smaller replacement cohort entering the rental pipeline behind the Millennials. The net effect for multifamily investors: a period of structural demand support through the early 2030s, followed by potential vacancy pressure as the rental-age population contracts and the ownership path becomes more accessible through inherited and freed housing stock. The pace and magnitude of this transition will depend heavily on immigration levels — a variable explored in the U.S. Demographics and Global Demographics tiles.

Projections used for charts above assume zero net immigration after 2025 and zero deaths of existing residents as a baseline. In practice, the U.S. has averaged roughly 1 million net immigrants per year over the past decade, though this figure has varied widely — from pandemic-era lows near 250,000 (2021) to a CBO-estimated 3.3 million in 2023. U.S. immigrants during this time period had a median age of 28, adding to the prime renter-age population. While net immigration has slowed sharply since mid-2025 due to policy changes, future levels remain uncertain and could meaningfully offset or delay the demographic declines shown above.