Unlike Millennials, Gen Zers may surpass their parents as homeowners

Key takeaways

  • Adults in the Gen Z generation have a higher homeownership rate than their Gen X parents did at their age.
  • Studies show that members of the Gen Z generation aspire to homeownership in greater numbers than millennials.
  • Gen Z homeowners are more common in more affordable housing markets.
  • Gen Z adults are taking steps to increase their income, such as a second job or a job change.
  • Educating younger adults on the path to homeownership could be profitable.

Move over millennials — the Gen Z generation is about to steal your spotlight. While each generation faces financial challenges, adult Gen Zers — aged 19 to 25 in 2022 — are tackling money matters head-on, including buying homes. According to a report released by Redfin, adults in that age cohort who purchased homes in 2020 and 2021 put themselves on a slightly better homeownership trajectory than their parents.

Nearly one-third (30%) of 25-year-olds owned their home in 2022, according to the report. That’s slightly higher than homeownership rates for millennials (28%) and Gen Xers (27%) when they were 25 and somewhat lower than the rate for baby boomers (32%) when they were 25.

While millennials buy more homes than any other generation (about 60% of the homes sold in the last several years were purchased by millennials), they still lag behind their parents. For example, in 2022, 62% of 40-year-olds owned a home, which is lower than the 69% rate for baby boomers when they were 40.

Millennials faced numerous financial challenges, with the oldest in that generation starting work during the 2001 recession, followed by the 2008 financial crisis that limited their ability to earn and save money.

Generally, older generations are more likely to own a home than younger ones, according to Redfin's report. Seventy-nine percent of baby boomers own a home, compared to 71% of Gen Xers, 52% of millennials, and 26% of adults in the Gen Z generation.

Where to find Gen Z buyers

While millennial buyers represent a more significant part of the market in job centers such as Seattle, where they bought more than 40% of the homes sold in 2022, Gen Z homebuyers are typically found in more affordable areas, according to Redfin’s report.

For example, 9% of the homes sold in 2022 in Virginia Beach were bought by Gen Zers. Other markets with the highest percentage of Gen Z buyers include Cincinnati (where 8.5% of homes sold in 2022 were to buyers aged 19 to 25), Detroit (7.9%), St. Louis (7.5%), Indianapolis (7.1%), Pittsburgh (7%), Kansas City, Missouri (6.7%), Cleveland (6.6%), Warren, Michigan (6.6%) and Minneapolis (6.5%).

According to Redfin, the typical price of a home bought by a Gen Zer in the above markets was $255,000 or less in 2022.

Dreaming of homeownership — and working towards it

Studies show that most people want to own a home regardless of age, but a recent survey reported by National Mortgage News found that 87% of Gen Zers want to own a home in the future compared to just 63% of millennials. Financial security is a core value for the Gen Z generation after the shocks of the financial crisis and the pandemic recession. For 68% of them, buying a house is considered a way to build wealth, compared to 60% of millennials who share that perspective.

Despite the challenges of inflation, high home prices, and higher interest rates than in recent years, adults in the Gen Z generation appear to be preparing for a solid financial future.

In a recent Bank of America survey about Gen Z and finances, 66% said they are actively saving for financial goals, and 58% are optimistic about their financial future. In the face of inflation and other challenges, 75% of Gen Zers are taking or considering steps to earn extra income, such as changing jobs, turning a passion into a source of income, taking on a second job, or accepting a job they don't like, according to the survey.

Realtors can educate prospective buyers about down payment assistance programs and low down payment loans.

You can help your young first-time homebuyer clients feel greater peace of mind and financial stability when they buy with a Cinch home warranty. Learn more at cinchrealestate.com.

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