Homeownership on hold: Long-term costs for young adults of color

Mirian Fuentes has big plans for her 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 home — a key step toward building generational wealth as the children of immigrant parents. 

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

Fuentes isn’t alone. She is among the Gen Z and millennial adults delaying or abandoning major life milestones, like homeownership. It’s a reality felt even more keenly among young adults of color.

Among Americans with credit card debt, for example, Hispanic adults are more than twice as likely as white and Black adults to say they have delayed buying a home because of that debt, according to Bankrate’s Credit Card Debt Report.

It makes me a little sad, because I think 20-year-old me would have thought that 30-year-old me would have already accomplished these things

— Mirian Fuentes

Social media only adds to the pressure. “You see your friends and peers and some of them have already accomplished these milestones,” she says. “You can’t help but compare yourself and say, ‘I should probably be in that same situation.’”

The consequences of delaying major life milestones go beyond failing to check off life goals, especially for young adults of color like Fuentes. When paying off debt takes priority, it restricts “their ability to accumulate wealth,” says Breno Braga, an economist at the Urban Institute, a nonprofit research organization based in Washington, D.C. “This pattern is likely to perpetuate and even further exacerbate racial wealth inequality as these cohorts enter their prime working and wealth-building years.”

How the wealth gap disproportionately affects young adults of color

A home is the largest asset most people will ever own, and it’s also a major driver of generational wealth. For young people of color, it’s a milestone they increasingly can’t afford, pushing them further behind their white peers. 

According to Redfin, only 32% of Black millennials and 14% of Black Gen Zers own homes, about half the rate of their white peers. This dynamic is shaping who can build equity and who gets left behind. 

Historically, Black and Hispanic Americans have had the lowest homeownership rates of all ethnic groups. Heavy debt loads aren’t making the possibility of buying a home any easier. According to the Urban Institute, 45% more young adults of color (18-24) have debt in collections than their white counterparts, suggesting “the group is managing debt instead of building assets,” says Braga.

Add to that the stark racial wealth gap. The most recent federal data shows that in 2022, the median wealth of the typical white family ($285,000) was six times that of the typical Black family ($44,900) and five times that of the typical Hispanic family ($61,600). Those disparities begin early in adulthood, limiting the ability of young people of color to save for a down payment for a home.

For Fuentes, growing up with parents who held minimum-wage jobs, getting extra help to buy a home simply wasn’t an option.

“When adults of color accumulate less wealth, they are less able to purchase homes in high-opportunity neighborhoods, invest in their children’s education or provide financial support during key life transitions,” says Braga.

The cost of postponing homeownership (2020-2025)

The median age of first-time homebuyers is now 40, pushing a once-early milestone further into midlife. Between 2020 and 2025, for example, those who postponed buying a home missed out on substantial price and equity gains.

Source: Bankrate: States where home equity has risen the most/least since 2020

Back in 2019, then 24-year-old Savannah Liberato, the daughter of Puerto Rican and Dominican parents, dreamed of becoming a single homeowner. “I knew people with salaries lower than mine who had purchased a home,” she says. But soon, Liberato realized her student loan debt, along with the car loan she co-signed for her mother, would make buying a home impossible.

“If I had to sum it up into one emotion, I would say initially I was defeated,” she says.   

Today, now 31 years old, Liberato’s circumstances have changed. In particular, she has a fiancé, Adam. As of early 2025, the couple had eliminated $69,000 in combined debt: $29,000 in student loans and car loans for her and $40,000 in student loans for him. (She dipped into her savings and he had his loans forgiven.) Now, homeownership feels possible again. 

“The ideal plan would be we save up for the wedding,” she says. “We get married in 2027. We live together for a year, stockpiling one person’s paycheck. Then maybe put a 20%, 30% down payment on a home in the second year of marriage.”

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

“Currently, my partner and I are blessed to have good incomes where we should be able to comfortably afford a home,” says Liberato, who works for Bankrate’s parent company, Red Ventures. “I’m still a little sad I couldn’t do it on my own, but I know that together we will have a better quality of life, as opposed to me being house poor on my own.”

Buying a home in 2020 vs. 2025

2020 was a wild year for the housing market: As the pandemic hit, 30-year fixed mortgage rates dropped, eventually hitting a near-record low of 2.95%, according to Bankrate’s tracking. By 2025, rates had more than doubled, and home prices weren’t far behind.  

Even so, while there’s a real cost to delaying homeownership, waiting isn’t automatically a mistake. Taking time can give buyers a chance to improve their credit, pay down debt and save for a larger down payment — all of which can make a future purchase more manageable. If you’re worried about rates increasing, remember that buying at a higher mortgage rate doesn’t mean you’re locked into it forever. If rates drop in the future, you have the option of refinancing your mortgage to lower your rate and monthly payments. 

Source: Bankrate’s mortgage calculator

Charting a path to homeownership

You don’t have to give up on your dreams of homeownership forever. Certainly, there are circumstances and unexpected expenses that are beyond your control, so take control of what you can. Here are five steps you can take to work toward achieving homeownership:

• Set a clear timeline and goal: Determine how much you need for a down payment and when you want to buy. Set up automatic transfers each paycheck to steadily build your down payment.
• Pay down high-interest debt first: Reducing student loans, credit cards or car loans can improve your credit profile and free up more money for home savings.
• Temporarily cut unnecessary expenses: Living frugally for a year or two can significantly boost your down payment savings.
• Work on improving your credit: Your credit score is an important factor when buying a home. Check your credit reports for errors and pay your bills on time — even small late payments can have a big impact on your credit score.
• Shop around and be flexible: When it’s time to buy, don’t settle for the first house you see or the first mortgage offer you get. After all the work you did to get to this point, don’t let impatience cost you money.

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

“Given that owning a home is such an important component of forming that generational wealth, it’s a big plan for us,” she says. “Thanks to my partner being incredibly more positive-minded, I’m reminded that it’s actually not impossible. With a combined income, it’s mostly about putting our money to work by aggressively paying off debt and taking planning for our future very seriously. So generational wealth isn’t necessarily off the table. It may take longer, but it’s still possible.”