Andy Heatherington, Keri Sidle, and Anne Hogan live in three very different corners of America, but they all bought their first homes for the same reason – their rent got too crazy.

“When I first moved here in 2013, it was $800 for everything,” says Mr. Heatherington, in Atlanta. “By the time I moved it was $1150.”

After three years in a one-bedroom apartment, Heatherington bought his split-level three-bedroom, two-bath home east of downtown Atlanta for $109,000 in July of last year. “I had the goal to buy within one year, but I wasn’t able to save anything,” he says.

He managed to scrape together a 5 percent down payment, thanks to a promotion at his job doing quality control at a call center, and cutting back on spending. His monthly mortgage is now $750.

“It makes me feel like a grownup,” says Heatherington. “I like the fact that it’s mine, it’s quiet, and that the dog has space to roam around. But in terms of drawbacks, now I’m responsible for repairs and I’m still learning the different noises the house makes.”

These 30-somethings are part of a growing cohort of Millennials entering homeownership. As they do so, they’re bucking a few widely held stereotypes. People born after 1982, after all, were supposed to embrace the sharing economy and eschew the usual trappings of adulthood, delaying marriage and avoiding ownership of things like houses and cars.

Yet, “Millennials are bullish [on owning homes],” says Ralph McLaughlin, chief economist at Trulia, an online listings resource. “In our surveys more Millennials tell us it is part of the American dream than any other generation.” [Editor's note: The story has been updated to correct the spelling of Mr. McLaughlin's last name.]

The ownership trend is fueled in part by more Millennials becoming parents, and by more of them feeling a sense of career stability. But it also faces headwinds. The combination of a tight supply of homes available to them and common Millennial tropes (They want to live in cities! They’re loaded with debt! They value experiences more than ‘stuff’!) makes the path to ownership more difficult.

That’s leading to fundamental changes in the housing market itself – such as a trend toward smaller down payments. And to the degree that Millennials remain financially unready to buy, the risk is that the already-yawning wealth gap between owners and renters widens further.

“There are some very early signs that group of younger buyers is starting to become homeowners in greater numbers, but it’s not a solid trend yet,” says Daren Blomquist, senior vice president of real estate date firm ATTOM Data Solutions. “Many of them are needing help to do so.”

Taking the plunge

Signs of Millennials clambering onto the property ladder have been growing. According to ATTOM’s research, more people are buying houses for themselves rather than investors snapping up properties to rent out – a pattern that became common in the wake of the 2007 housing crash. The share of “starter homes” sold that are “owner-occupied,” in industry parlance, has been growing since 2013.

Another sign: During the first three months of 2017, more newly formed households were buyers than renters, for the first time in 11 years, according to a Trulia analysis of Census Bureau data. The exact age breakdown for these newly formed households is difficult to parse. But Mr. McLaughlin says that Millennials, because of their sheer numbers and current stage in life (more and more are getting married and moving out of their parents’ homes), almost certainly make up the bulk of them.

Keri Sidle made the switch after moving from Jacksonville, Fla., to the St. Paul area so her husband, Dan, could take a job with the Minnesota Vikings. The relocation came with major sticker shock. “In Jacksonville, we were paying $860 [per month] for three bedrooms and a garage,” says Ms. Sidle, who works for the Minnesota Department of Agriculture. “Here it was $1,300 for two bedrooms.”

The steep rent made it difficult for them to save – a pervasive problem for renters, particularly in and around large cities.

"Renting and paying that much, we thought: How will we save to buy a house?” Ms. Sidle remembers.

A recent survey by Apartment List, for example, found that 80 percent of Millennial renters in major metros would like to buy a home, but two-thirds will not be able to afford it anytime in the near future. According to Apartment List’s calculations, less than 30 percent of those surveyed will be able to scrape together a 10 percent down payment over the next three years. ATTOM data show that in 65 percent of the country, the average monthly mortgage payment is less than the average monthly rent.

Two other major obstacles: student loans and homes available for them to purchase. Young adults ages 20 to 26 carry a debt load of $10,205 on average, according to TD Ameritrade's “Young Money Survey.” Most expect to pay off their debts sometime in their mid- to late thirties.

Even for those who are financially ready, suitable houses are scarce: Nationally, the supply of homes for sale hit its lowest level on record during the first quarter of this year, according to Trulia. And the number of starter homes available has fallen 8.7 percent from a year ago.

A little help?

The Sidles, who got out of college debt-free, managed a 3 percent down payment on their $160,000 townhouse, thanks to them both getting fortuitously timed bonuses at work. But they had planned on getting help. “We had talked to [Mr. Sidle’s] dad, and was going to give us a $5,000 loan. Luckily we didn’t have to do that. Had we not had that option would have taken us a while.”

Anne Hogan, too, needed a boost to afford the down payment on her two-bedroom condo in Burbank, Calif. “When my grandparents passed away, I did have some money socked away from that,” she says. “Without that I wouldn’t have been able to do it.”

Beyond help with a down payment, getting a leg up onto the property ladder is becoming a common arrangement, Blomquist points out. Twenty-two percent of all single-family home purchases nationwide in the first three months of 2017 were to “non-married co-borrowers,” or co-signers who get onto a loan to help a buyer qualify for a property. The percentage was much higher in some of the country’s hottest housing markets, like Miami, Seattle, San Diego, Los Angeles, and Portland.

“The most common relationship is a parent helping a child buy a home,” Blomquist says. “It points to a problem with affordability, especially in these bigger cities that are attractive to Millennials.”

This can make for an unfair playing field, he continues. “The inequality piece is that you have folks who already have home equity wealth are leveraging that to build more wealth through real estate. Folks who haven’t bought a home yet are further behind because … renting is draining their ability to save up and buy a home. The haves are gaining more home wealth, and the have nots are being left out to a large extent.”

How housing market adapts

Housing developers and lenders are finding ways to let more sidelined buyers in. From January through March, 31 percent of speculative new homes from major builders were under 2,250 square feet, or “starter homes” – up from 27 percent a year before.

During the same period, ATTOM data show, the dollar amount and percentages for down payments decreased (Heatherington and Sidle both had down payments in single-digit percentages; Hogan put down 10 percent). “This could be an indication that more first time buyers with lower payments are getting involved,” Blomquist says.

Within large cities, he adds, more developers are “flipping” homes (buying and fixing them up for resale). In places with a dearth of land for new construction, this means some added inventory of smaller homes near downtowns, including in areas like East Los Angeles that in prior years would have been considered less desirable, Blomquist says.

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Ms. Hogan, in Burbank, was more interested in the neighborhood than the size of her first place. And besides, she says she wasn’t ready for a full-on house just yet. “I am single and work a lot, so I knew I wanted a condo instead of a house,” she says. “I don’t want to handle the yard work and stuff.”

“This is a good bridge for a first time buyers,” she continues. “I have some of the perks of an apartment building, but I can still paint a wall and swap out a light fixture.”