For many middle-class Americans, their home isn’t just their nest. It’s their nest egg.

For these homeowners, their homes represent from 50 to 70 percent of their total assets, ahead of any other asset class, including the 25 percent of their wealth represented by their retirement accounts. In fact, increasing home equity values over the last several years has turned millions of Americans into “paper millionaires.”

Date Median Sales Price Jan 1996 $137,000 Jan 2000 $165,300 Jan 2007 (Pre-Crash Peak) $254,400 Jan 2010 (Post-Crash Trough) $222,900 Jan 2020 (Pre-Pandemic) $329,000 Oct 2022 (All-Time Peak) $479,500 Jan 2026 (Current) $400,300 Source: U.S. Census Bureau and HUD

The chart above shows why it has become reasonable for homeowners to assume that their home’s value would continue to rise unabated. Growing steadily up until the Great Recession of 2009, housing values continued to recover lost ground until reaching an all-time high of $479,500 in October 2022. Since then, higher mortgage rates, and other economic pressures have brought the average home price down to about 83 percent off its all time high four years ago.

In 2025, home prices grew by a very modest 1.3 to 1.8 percent. But that growth fell behind the 2.7 to 2.9 percent rate of inflation. For the first time in over ten years, the value of American homes adjusted for real purchasing power fell by 1.5 to 2 percent.

THE FUTURE OF HOME VALUES

For homes to keep appreciating in value, you’ve got to have a steady supply of buyers willing to purchase them. But there are troubling demographic signs that portend lower home ownership among Millennial and Gen Z buyers. And that could spell problems for those counting on their home values to hold steady or grow over time.

Here’s what the current economic and social science data are telling us:

A study published by the University of Chicago predicts that, compared to their parents’ generation, 10 percent fewer Millennials will reach retirement age as homeowners.

According to a recent report from the National Association of Realtors, the average age of first-time home buyers has risen dramatically from 30 to 40, a record high. In 1992, by way of contrast, the average age of first-time buyers was 28. Fewer buyers have children and the average age of repeat buyers is older than ever: 63 years of age. Clearly, the market is aging, and increasingly childless, details which have dramatic implications for the kinds of homes that will be desirable to these older buyers.

The factors keeping younger buyers out of the housing market or delaying their purchase until much later are complex. There are clear economic implications: higher home prices require a much larger down payment, which is harder and harder for young people to accumulate. Sluggish wage growth coupled with stubborn inflation mean that most young people’s purchasing power is either losing ground or only just barely keeping step. High interest rates also make a home purchase more challenging. With wage growth and inflation overall making life more economically challenging for young people, many are choosing to forgo saving for a home purchase entirely.

Those that do buy are less likely to be parents, or to have small families when they do. These factors will also influence which homes are more desirable to younger buyers.

THE CHALLENGE FOR HOME OWNERS

While there are many emotional and psychological reasons to own the roof over your head, it may be risky to place too much hope on our homes becoming the bedrock of our financial security. The guiding principal of most investment strategies is to diversify, so adding other investments to the mix may help provide a path toward a more balanced financial portfolio.