How Are Gen Z Buyers Affording Homes?

The homeownership rate for adult Gen Zers (19-26 years old) is higher than it was for their predecessors at the same age. How are Gen Z buyers succeeding in the housing market?  

Adult Gen Zers currently comprise only 3% of homebuyers, according to the National Association of Realtors®. However, many are still eager to buy a home despite market challenges.  

About 87% of Gen Zers view homeownership as an important factor in building wealth, and nearly 65% say they’re eager to jump into homeownership, preferably within the next five years.  

Still, Gen Z is facing record-high home prices while just starting out in their careers. How are they affording homes? 

“While purchasing on a single income can be difficult when considering housing affordability, a single buyer may also need less square footage for a growing family,” says NAR Deputy Chief Economist Jessica Lautz. “There is some indication in research that Gen Z has learned from the financial missteps of millennials and are thoughtfully considering their higher education, which could mitigate some of the tremendous student loan debt held by other generations.” 

Among millennials, 61% blame student loan debt for delaying their homebuying process.  

NAR also cites that young adults now are more willing to move back in with family than previous generations, bypassing high rent costs and saving money for a down payment.  

Other ways Gen Zers are succeeding in the housing market include: 

• Utilizing loan alternatives, such as FHA loans, first-time homebuyer grants and down payment assistance programs 
• Receiving financial gifts from family members and inheritances 
• Making compromises on the homes they purchase, such as price, location and size  
• Turning to co-buying with friends or family members 

Another way Gen Zers are saving money on homebuying is by seeking out more affordable markets. Research shows that Gen Zers who earn $63,000 or less are most likely to purchase homes in cities where properties priced below $165,000 – like Pittsburgh, which is the eighth most popular Gen Z hot spot – are more common. Top Gen Z homebuying hot spots include: 

1. Indianapolis-Carmel-Anderson, Indiana (median property value of homes purchased by Gen Zers: $225,000) 
2. St. Louis ($185,000) 
3. Cincinnati ($205,000) 
4. Jacksonville, Florida ($275,000) 
5. Virginia Beach-Norfolk-Newport News, Virginia-North Carolina ($265,000) 
6. Kansas City, Missouri-Kansas ($215,000) 
7. Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin ($285,000) 
8. Pittsburgh ($165,000) 

For more insights into homebuyer demographics, register for this month’s PAR webinar with Dr. Lautz titled “Baby Boomers, Millennials and Real Estate,” which will be held on Nov. 12 at 10 a.m.