Homeownership Deferred: Long-Term Costs for Youth of Color

Mirian Fuentes has big plans for the future.

The 30-year-old Mexican-American has been dating her partner Andres since 2024 and knew early on that he was “the one.” The couple dreams of getting married, starting a family and buying a house. This is an important step in building intergenerational wealth as a child of immigrant parents.

But those plans are on hold because Fuentes has $169,000 in student loan debt and $14,000 in credit card balances.

Fuentes is not alone. She is one of many Gen Z and Millennials who are delaying or forgoing major life milestones like homeownership. It’s a reality felt even more acutely among young people of color.

For example, among Americans with credit card debt, Hispanic adults are more than twice as likely as white or black adults to say their debt has delayed them from buying a home, according to Bankrate’s Credit Card Debt Report.

It’s a little sad. Because I think 20-year-old me thought 30-year-old me had already achieved these things.

—Millian Fuentes

Social media only adds to the pressure. “If you look at your friends and colleagues, some have already achieved these milestones,” she says. “I can’t help but compare myself and say, ‘I’m sure I’m in the same situation.'”

The effects of delaying major life milestones extend beyond not achieving life goals, especially for young people of color like Fuentes. Breno Braga, an economist at the Urban Institute, a Washington, D.C.-based nonprofit research institute, said that prioritizing debt repayment limits “the ability to accumulate wealth,” and that “this pattern is likely to persist and further exacerbate racial wealth inequality as these groups enter their prime wealth-building years.”

The wealth gap disproportionately affects young people of color

A home is the largest asset most people will ever own, and it is also a major driver of intergenerational wealth. For young people of color, this is a milestone they are increasingly unable to afford, setting them back even further than their white peers.

According to Redfin, only 32% of Black Millennials and 14% of Black Gen Z own a home, which is about half of the white generation. These power relations shape who can build equity and who is left behind.

Historically, black and Hispanic Americans have had the lowest homeownership rates of all ethnic groups. Having a lot of debt doesn’t make it easy to buy a home. According to the Urban Institute, young people of color (ages 18 to 24) have 45% more debt than white young people, suggesting that “this group is managing debt rather than building assets,” Braga said.

In addition, there is a serious gap between rich and poor between races. The median wealth of the typical white family in 2022 ($285,000) was six times that of the typical black family ($44,900) and five times that of the typical Hispanic family ($61,600), according to the latest federal data. These disparities begin early in adulthood, limiting young people of color’s ability to save for a down payment on a home.

For Fuentes, who grew up with parents who worked minimum wage jobs, getting additional help to buy a home was never an option.

“When adults of color accumulate less wealth, they are less able to buy homes in high-opportunity areas, invest in their children’s education, and provide financial support during important life transitions,” Braga said.

Cost of deferring homeownership (2020-2025)

The median age for first-time homebuyers is now 40, pushing a once-early milestone further into midlife. For example, people who postponed buying a home between 2020 and 2025 missed out on significant price and stock appreciation.

sauce: Bank Rates: States with the most or least growth in home equity since 2020

Back in 2019, Savannah Liberato, then a 24-year-old daughter of Puerto Rican and Dominican parents, dreamed of becoming a single homeowner. “I knew someone who bought a house who made less than me,” she says. But soon, Liberato realized that her student loan debt and the car loan she co-signed for her mother would make buying a home impossible.

“If I had to sum up this feeling in one word, I would say that at first I was defeated,” she says.

Today, at age 31, things have changed for Liberato. Notably, she has a fiancé, Adam. As of early 2025, the couple had eliminated a combined $69,000 in debt: her with $29,000 in student loans and a car loan, and he with $40,000 in student loans. (She poured into her savings and he got the loan forgiven.) Now homeownership feels possible again.

“The ideal plan is to save up for your wedding,” she says. “We’re getting married in 2027. We’ll live together for a year and save one of our salaries. Then in the second year of marriage, we might put 20% or 30% down on a house.”

Despite having a strategy in place and homeownership on the horizon, the delay still lingers in her mind.

“Right now, my partner and I have a good income and should be able to comfortably buy a home,” says Liberato, who works for Bankrate’s parent company, Red Ventures. “I’m still a little sad that I couldn’t make it on my own, but I know that we’ll have a better quality of life together than if I were left alone and broke.”

Comparing home purchases in 2020 and 2025

According to Bankrate research, 2020 was a turbulent year for the housing market. The pandemic caused 30-year fixed mortgage rates to fall, ultimately hitting a near-record low of 2.95%. By 2025, interest rates had more than doubled, and home prices weren’t far behind.

Still, while there are real costs to delaying homeownership, waiting isn’t automatically a mistake. Over time, buyers have the opportunity to improve their credit, pay off debt, and save for a larger down payment, giving them more control over future purchases. If you’re worried about interest rates rising, remember that buying at a higher mortgage rate doesn’t mean you’re locked into that rate forever. If interest rates drop in the future, you can refinance your mortgage to lower your interest rate and monthly payments.

sauce: Bankrate’s Mortgage Calculator

Chart your path to homeownership

You don’t have to give up on your home dream forever. Granted, there are some situations and unexpected expenses that are out of your control, so try to control what you can. Here are five steps you can take toward homeownership.

• Set clear timelines and goals. Decide how much down payment you need and when you want to buy. Set up automatic transfers every paycheck to steadily build up your down payment.
• First, pay off your high-interest debt. Reducing your student loans, credit cards, and car loans will improve your credit score and free up more money for home savings.
• Temporarily reduce unnecessary expenses: Living frugally for a year or two can significantly increase your down payment savings.
• Please try to improve your credit score. Credit score is an important factor when purchasing a home. Check your credit report for errors and pay your bills on time. Even a small late payment can have a big impact on your credit score.
• Please be flexible. When it’s time to buy, don’t settle for the first home you see or the first mortgage offer you get. After all the hard work it took to get to this point, don’t let impatience cost you money.

To get closer to her goal of buying a home and improving her finances, Fuentes enrolled in a debt consolidation program. She focuses on paying off debt and improving her credit. Fuentes’ plan is to marry Andres within the next two to three years. Then, in three to five years, the couple wants to buy a home.

“This is a big plan for us, given that homeownership is such an important part of building intergenerational wealth,” she says. “My partner’s incredibly proactive attitude helped me realize that it’s not actually impossible. If you combine your income, you’ll most likely put your money to good use by paying down debt aggressively and planning for your future very seriously. So generational wealth isn’t necessarily off the table. It might take more time, but it’s still possible.”