{"id":4241,"date":"2023-04-21T16:27:54","date_gmt":"2023-04-21T16:27:54","guid":{"rendered":"https:\/\/preprod.realtrends.com\/blog\/2023\/04\/21\/in-the-race-to-homeownership-some-gen-zers-are-pulling-ahead\/"},"modified":"2025-03-13T02:50:41","modified_gmt":"2025-03-13T02:50:41","slug":"in-the-race-to-homeownership-some-gen-zers-are-pulling-ahead","status":"publish","type":"post","link":"https:\/\/preprod.realtrends.com\/blog\/2023\/04\/21\/in-the-race-to-homeownership-some-gen-zers-are-pulling-ahead\/","title":{"rendered":"In the race to homeownership, some Gen Zers are pulling ahead"},"content":{"rendered":"\n<p>Thanks to record low <a href=\"https:\/\/preprod.housingwire.com\/mortgage-rates\/\" target=\"_blank\" rel=\"noreferrer noopener\">mortgage rates<\/a> and a strong <a href=\"https:\/\/preprod.housingwire.com\/articles\/labor-market-shows-signs-of-a-gradual-slowdown\/\" target=\"_blank\" rel=\"noreferrer noopener\">job market<\/a>, adult Gen Zers (those ages 19-25 in 2022) who purchased homes in 2020 and 2021 have put themselves on a slightly better <a href=\"https:\/\/preprod.housingwire.com\/articles\/low-income-owners-home-values-have-increased-by-75-since-2012\/\" target=\"_blank\" rel=\"noreferrer noopener\">homeownership trajectory<\/a> than their parents, according to a <a href=\"https:\/\/www.redfin.com\/news\/gen-z-millennial-homeownership-rate-home-purchases\/\" target=\"_blank\" rel=\"noreferrer noopener\">report<\/a> released Friday by <strong>Redfin<\/strong>.<\/p>\n\n\n\n<p>The report is based on home purchase data by age group collected by the <strong>Home Mortgage Disclosure Act<\/strong> (HMDA) database from 2018 to 2022. The analysis does not include all-cash home purchases or the purchase of manufactured homes.<\/p>\n\n\n\n<p>Data on generational homeownership rates was calculated from the <strong>Current Population Survey\u2019s Annual Social and Economic Supplement<\/strong> (March Supplement), from 1976 to 2022, and data on monthly mortgage payments and household incomes of 25-year-olds was calculated from the 1990 Census and the 2021 <strong>American Community Survey<\/strong>. The 1990 figures were adjusted for <a href=\"https:\/\/preprod.housingwire.com\/articles\/inflation-cooled-further-in-march-but-shelter-costs-are-still-high\/\" target=\"_blank\" rel=\"noreferrer noopener\">inflation<\/a> using the <strong>Consumer Price Index<\/strong>.<\/p>\n\n\n\n<p>In 2022, 30% of 25-year-olds owned their own home, higher than the 27% rate for Gen Xers (those ages 42-57) when they were 25, and slightly behind the 32% homeownership rate for baby boomers (those ages 58-76) when they were 25.<\/p>\n\n\n\n<p>\u201cThe rising tide lifted Gen Z homebuyers in 2020 and 2021; they were part of the pandemic-driven home buying frenzy,\u201d <a href=\"https:\/\/preprod.housingwire.com\/tag\/daryl-fairweather\/\" target=\"_blank\" rel=\"noreferrer noopener\">Daryl Fairweather<\/a>, <a href=\"https:\/\/preprod.housingwire.com\/tag\/redfin\/\" target=\"_blank\" rel=\"noreferrer noopener\">Redfin<\/a>\u2019s chief economist, said in a statement \u201cRecord-low mortgage rates, remote work providing freedom to move somewhere more affordable and skyrocketing rental costs motivated some Gen Zers to break into the housing market. <\/p>\n\n\n\n<p>&#8220;While the oldest of their generation had just graduated college when the pandemic started and hadn\u2019t started building up their bank accounts, they had some financial advantages. The unemployment rate was near\u00a0<a href=\"https:\/\/fred.stlouisfed.org\/series\/UNRATE\" target=\"_blank\" rel=\"noreferrer noopener\">record lows<\/a>\u00a0in late 2021 and 2022, with pandemic-related labor shortages in industries that attract young workers like hospitality and retail prompting those employers to\u00a0<a href=\"https:\/\/www.reuters.com\/business\/us-leisure-hospitality-pay-surges-record-now-will-workers-come-2021-06-04\/\" target=\"_blank\" rel=\"noreferrer noopener\">boost pay<\/a>. Government stimulus payments, the pause on student loan repayments and the fact that many young adults lived with family during the lockdowns also helped Gen Zers save money.\u201d<\/p>\n\n\n\n<p>These statistics contrast with the common belief that it is more difficult for today\u2019s 20-somethings to buy a house than generations past. In 2021, Gen Z homeowners spent the same portion of their income on housing, as they did 30 years earlier, as the median monthly mortgage payment was $1,013 or 16% of their median income of $74,900, the same percentage as in 1992. However, due to 2023\u2019s higher mortgage rates, 25-year-olds buying a home today are most likely going to be spending a higher portion of their income on monthly payments.<\/p>\n\n\n\n<p>The typical mortgage rate for homebuyers under the age of 25 using a conventional loan was 3.3% in 2020 and 3.1% in 2021, compared to the current <a href=\"https:\/\/preprod.housingwire.com\/articles\/mortgage-rates-climb-after-five-straight-weeks-of-declines\/?cx_testId=23&amp;cx_testVariant=cx_1&amp;cx_artPos=0&amp;cx_experienceId=EXQEK4SQSVBN#cxrecs_s\" target=\"_blank\" rel=\"noreferrer noopener\">30-year fixed rate mortgage rate<\/a> of 6.39%. Adult Gen Z homebuyers also benefited from strong wage growth as wages for 16- to 24-year-olds rose 12% year over year as of January, higher than any other age cohort.<\/p>\n\n\n\n<p>On the other hand, Gen Zers who did not purchase a home while mortgage rates were in the high-2.0% to low-3.0% range, will most likely face many challenges. Due to the higher mortgage rates, most Gen Zers have been priced out of even the lower-priced end of the market. Gen Z homebuyers who can purchase a home will also face stiff competition as housing inventory remains tight in most markets<\/p>\n\n\n\n<p>In addition, economic slowing could impact the employment status of many Gen Zers, who on average have more student debt than millennials.<\/p>\n\n\n\n<p>Unlike their younger counterparts, Millennials are tracking behind older generations when it comes to their homeownership rate. In 2022, 62% of 40-year-olds owned their own home, compared to 69% of baby boomers when they were 40 and 64% of Gen Xers when they were 40. In addition, just 43% of 30-year-olds owned their home in 2022, compared to 53% of baby boomers and 49% of Gen Xers when they were both 30.<\/p>\n\n\n\n<p>\u201cMillennials have been financially unlucky. Their parents had a more straightforward financial journey,\u201d Fairweather said. \u201cThe oldest millennials entered the workforce during the&nbsp;<a href=\"https:\/\/www.thebalancemoney.com\/2001-recession-causes-lengths-stats-4147962\" target=\"_blank\" rel=\"noreferrer noopener\">2001 recession<\/a>. Then came the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/g\/great-recession.asp\" target=\"_blank\" rel=\"noreferrer noopener\">2008 financial crisis<\/a>, with many millennials in their first post-college job. It limited their earnings, overall wealth and ability to buy a home for&nbsp;<a href=\"https:\/\/www.washingtonpost.com\/business\/2020\/05\/27\/millennial-recession-covid\/\">many years afterward<\/a>. Millennials started to gain home buying momentum just before the pandemic, but they were once again dealt a bad hand with pandemic-related job losses in April 2020.<\/p>\n\n\n\n<p>\u201cBut the 2020 downturn was brief, followed by a strong recovery. Like some Gen Zers, a portion of millennials took advantage of&nbsp;<a href=\"https:\/\/fortune.com\/recommends\/banking\/americans-personal-income-increased\/\" target=\"_blank\" rel=\"noreferrer noopener\">rising incomes<\/a>&nbsp;and record-low mortgage rates to buy a home,\u201d Fairweather continued. \u201cThe pandemic home buying boom is likely to lead to further&nbsp;<a href=\"https:\/\/www.npr.org\/sections\/money\/2021\/04\/27\/990770599\/there-is-growing-segregation-in-millennial-wealth\" target=\"_blank\" rel=\"noreferrer noopener\">inequality<\/a>&nbsp;within the millennial generation: There are the \u2018mortgage millennials\u2019 who bought before home prices shot up more than 30% during the pandemic, or when mortgage rates were under 3%. Then there are the millennials who missed out. They\u2019re the ones who don\u2019t own homes and now face an uphill battle, with elevated home prices, monthly mortgage payments at a&nbsp;<a href=\"https:\/\/www.redfin.com\/news\/housing-market-update-high-housing-costs-low-inventory\/\">record high<\/a>, and no home equity. Gen Zers are in a similar \u2018haves versus have-nots\u2019 situation.\u201d<\/p>\n\n\n\n<p>Overall, homeownership is more prevalent with older generations than younger generations, with 79% of baby boomers owning a home, 71% of Gen Xers, 52% of millennials and 26% of adult Gen Zers.<\/p>\n\n\n\n<p>In 2022, the largest 10-year age cohort of homebuyers were those ages 25 to 34, who bought 33% of primary homes, followed by those ages 35 to 44, who bought 27% of them. In contrast, homebuyers under the age of 25 made up just 6% of home purchases in 2022.<\/p>\n\n\n\n<p>However, when broken down into different metro areas, Gen Z homebuyers are more prevalent in more affordable areas. People under the age of 25 bought 8.9% of primary homes sold in Virginia Beach, Virginia in 2022, more than anywhere else in the country. The rest of the top five was made up by Cincinnati, Ohio (8.5%), Detroit, Michigan (7.9%), St. Louis, Missouri (7.5%), and Indianapolis, Indiana (7.1%).<\/p>\n\n\n\n<p>In these five metro areas, the typical Gen Z homebuyer paid $255,000 or less for their home in 2022. Nationwide, in 2022, the typical primary residence purchased by a Gen Zer cost $235,000 and came with a $10,000 down payment (assuming a conventional loan). In comparison, 25- to 34-year-olds typically spend $355,000 on a home with a $30,000 down payment and 45- to 54-year-olds spend $405,000 with a $50,000 down payment.<\/p>\n\n\n\n<p>Instead of being concentrated in lower cost areas, homebuyers ages 25 to 34 purchased homes in technology hubs. In 2022, older Gen Zers and young millennials purchased 41.4% of homes sold in Seattle, 40.6% of homes in Philadelphia, 39.8% of homes in Pittsburgh, 39.7% of homes in San Jose, California, and 39.6% of homes in <a href=\"https:\/\/preprod.realtrends.com\/blog\/articles\/from-hot-to-not-the-austin-housing-market-saga\/\" target=\"_blank\" rel=\"noreferrer noopener\">Austin, Texas<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Adult Gen Z homebuyers have a higher homeownership rate than Gen Xers when they were the same age, while millennials are still struggling.<\/p>\n","protected":false},"author":34740,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[1760],"class_list":["post-4241","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.4 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>In the race to homeownership, some Gen Zers are pulling ahead<\/title>\n<meta name=\"description\" content=\"Adult Gen Z homebuyers have a higher homeownership rate than Gen Xers when they were the same age, while millennials are still struggling.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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