How to Carve Your Path into the Housing Market

6/1/2025

Homeownership is a key driver of personal wealth and community stability across the country. It’s a major milestone symbolizing financial security, independence, and the pursuit of the American Dream. However, the rising home prices and high mortgage rates have made it increasingly difficult for many would-be buyers to enter the market, leaving them on the sidelines, eager for the right moment to make their move.

Unfortunately, prices continue to climb. According to the National Association of Realtors (NAR), the median existing-home sale prices in February 2025 rose to $398,400- a 3.8% increase from the previous year. This marks an impressive 20 consecutive months of year-over-year price gains. 

The silver lining for buyers? The housing supply is also growing. Inventory was up 17% compared to the same time last year, offering more options for those ready to purchase. As we look ahead, the big question remains: will financial conditions start to favor buyers, or will the challenges persist throughout the rest of the year?

Biggest challenges

Despite a strong desire for homeownership, the path to owning a home is becoming increasingly difficult for younger generations. Many Millennials and Gen Z individuals are genuinely concerned that buying a home may remain out of reach- signaling a significant demographic shift in the housing market.

Millennials are the most educated generation in American history, but that achievement often comes with a heavy price: student loan debt. The average monthly student loan payment is around $536. Combined with other monthly expenses, this financial burden makes it difficult for Millennials to prioritize saving for a down payment. In fact, many are struggling to contribute to regular savings at all. Student debt remains one of the most significant barriers to homeownership for this generation.

Gen Z is expected to soon surpass Millennials in student loan debt, which could make breaking into the housing market even more challenging for them.

Read More: Taking Control of Your Student Loans

In addition to student loans, soaring home prices are a major hurdle. In many U.S. cities, housing prices have skyrocketed, far outpacing income growth. This makes it increasingly difficult for younger buyers to afford a home- let alone save enough for a substantial down payment. As a result, many are continuing to rent while they wait for the market to cool down or try to build their savings.

Even when homeownership is financially possible, some buyers are hesitant to take the leap. The idea of being locked into a long-term financial commitment in an unpredictable economy adds another layer of stress and uncertainty.

Steps young homebuyers should take

Your credit score plays a major role in today’s lending practices. One of the leading contributors to the 2008 housing crash was the approval of mortgages for borrowers who wouldn’t meet today’s stricter qualifications. Since then, lenders have become much more cautious, making it more difficult for less-qualified buyers to secure a mortgage.

If you’re planning to buy a home, boosting your credit score is a crucial first step. Start by paying off any bills that have gone into collections, as these significantly impact your score and signal lenders that you may struggle to repay debt. Next, focus on making all of your payments on time. Lenders view your past payment behaviors as a strong indicator of future reliability. If remembering due dates is a challenge, set up automatic payments or use calendar reminders to stay on track.

Another key consideration is private mortgage insurance (PMI), which is typically required if you put down less than 20% on a conventional loan. To avoid this extra cost, aim to save at least 20% of the home’s purchase price for your down payment. Research the specific requirements for the loan type you’re considering, so you know exactly how much to save. If you’re receiving a down payment gift from a relative, friend, or employer, have a conversation early to confirm how much they plan to contribute and whether you’ll need to make up the difference. Be sure to also obtain a gift letter from them in advance, as your lender will likely require documentation.

Read More: Mortgage Basics: Understanding the Terminology of Buying a Home

While browsing online is a great starting point, nothing beats visiting properties in person and getting a feel for the neighborhood and its amenities. Be clear with your real estate agent about your needs and preferences, so they can tailor their search to fit your criteria. At the same time, keep an open mind- it’s rare to find a home that checks every box. Focus on your must-haves and be flexible with your nice-to-haves.

Competing in a competitive market

Today’s market remains highly competitive, making it more challenging for buyers- especially younger ones- to secure a home. It all comes down to supply and demand: there are simply more people looking to buy than there are homes available. This imbalance creates what’s known as a seller’s market, where properties often receive multiple offers, sometimes above the asking price, and sell quickly.

In this type of market, preparation is everything. One of the most important steps you can take is getting pre-approved for a mortgage. A pre-approval letter signals to sellers that you’re a serious buyer with financial backing to complete the purchase. It also gives you a clear picture of your budget, allowing you to make a competitive offer with confidence and speed.

To get pre-approved, you’ll typically need to provide documents such as W-2s, recent pay stubs, bank statements, and valid identification. Requirements may vary depending on your lender and financial situation, so check in advance to ensure you’re fully prepared.

Read More: Navigating Home Buying in Today's Economic Climate 

When it comes to making an offer, pricing matters. In a seller’s market, lowballing can cost you the home- especially if the listing is already reasonably priced. In some cases, offering slightly above the asking price may give you a better chance of winning a bidding war. If you know there’s strong competition, consider offering at least the full asking price right away to show you’re serious.

It’s also important to manage expectations. In a hot market, it’s common to lose out on a few homes before you succeed. Don’t get discouraged if your first offer isn’t accepted. Work with your real estate agent or mortgage advisor to identify ways to strengthen your next offer. You may also want to revisit your list of must-haves versus nice-to-haves to broaden your options.

Above all, be patient. Keep making thoughtful strategic offers, and trust that the right home will come along. With persistence and preparation, you’ll increase your chances of securing a property you love.

Go Back