Affordability, Inventory Still Weighing on Gen Z

Little changed quarter-over-quarter as just 26.3% adult Gen Zers owned their own home in 2023, up from 26.2% in 2022 according to a new report from Redfin. Meanwhile, the homeownership rate for millennials rose to 54.8% from 52%, and the homeownership rate for Gen X rose to 72% from 70.5%. 

Baby Boomers saw little housing movement (78.8% in 2023 to 78.7% in 2022) down from a record 79.7% in 2020 as boomers begin to enter the later years of their lives and are downsizing to apartments, assisted living facilities, retirement homes, or are expiring altogether. 

According to Redfin, The homeownership rate for adult Gen Zers likely moved sideways in 2023 because it was an especially hard year to buy a home; mortgage rates surpassed 8% for the first time since 2000 and housing prices remained stubbornly high, causing homebuyer mortgage payments to soar. 

While that posed challenges for house hunters across generations, it was particularly difficult for America’s youngest homebuyers, many of whom are just starting their careers and don’t have significant savings or wealth from the sale of a previous home. 

The good news though, is that 2024 is looking to be a better year in terms of affordability than 2023 was. According to Freddie Mac, mortgage rates have dropped from over 8% in October to 6.8% as of mid-January, pushing homebuyers’ monthly payments down more than $300 from their 2022 record high. The drop in rates is bringing both buyers and sellers off the sidelines. And an increase in sellers has fueled a jump in new listings, which is giving buyers more options to choose from and could ultimately put downward pressure on prices. 

“Housing affordability remains strained, but things are looking up for Gen Z,” said Redfin Chief Economist Daryl Fairweather. “The recent decline in rents means Gen Zers can put more money toward saving for a down payment. Plus, the job market is strong, and career opportunities have become less concentrated in expensive cities during the remote work era, meaning many Gen Zers can choose to live somewhere more affordable.” 

Still, while Gen Zer homeownership rates have stagnated, the majority of them are still outpacing young people of past generations of homeowners. 

The homeownership rates for 19-to-25-year-old Gen Zers are higher than the homeownership rates were for millennials and Gen Xers when they were the same age. For example, the rate for 24-year-old Gen Zers is 27.8%, compared with 24.5% for millennials when they were 24 and 23.5% of Gen Xers when they were 24. 

Gen Zers have done their research. They know all of the real estate jargon and are entering the housing market more educated than prior generations,” said Jon Byram, a Redfin Premier real estate agent in Northern Virginia. “Some young first-time buyers are also coming in with financial help from family, or co-buying with family members, which boosts their buying power. And some have savings because they’ve been living with their family rent free.” 

Byram continued: “My youngest buyers handled the pandemic homebuying frenzy the best. Some older buyers had trouble grappling with the significant changes that had occurred in the market since the last time they purchased a house.” 

The only Gen Zers who are tracking behind prior generations are 26-year-olds, who were the oldest Gen Zers as of 2023. The homeownership rate for 26-year-old Gen Zers is 30%, below 31% for millennials at 26, 32.5% of Gen Xers at 26, and 35.6% of boomers at 26. 

Click here to view the report in its entirety. 

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Kyle G. Horst

Kyle G. Horst

Kyle G. Horst is a reporter for MortgagePoint. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography including best newspaper design by the Associated Press Managing Editors Group and the international iPhone photographer of the year by the iPhone Photography Awards. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at kyle.horst@thefivestar.com.
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