Is Home Ownership Out-of-Reach for Gen Z?

Generation Z, those born between the years of 1997-2012, are now joining the housing market. With about 70 million “Zoomers” in total, this generation makes up over 20% of the United States’ population. When we consider the age of those in this generation who can become homeowners (18 or older), there are close to 47 million Americans who have just entered the housing market.  

One of the biggest deterrents to Gen Z buying homes is the inability to save enough for a downpayment. With rent prices skyrocketing due to issues such as inflation, lack of rental properties, and the increase in short-term rentals (Airbnb), it becomes difficult to amass savings. With many young people throwing 30% or more of their annual income at rental expenses, saving enough for a downpayment is a steep, uphill battle.  

Most non-homeowners in this group have less than $10,000 set aside for home savings. With this reality, meeting a 20% downpayment means purchasing a home that is worth $50,000 or less, and predominantly, acquiring a “fixer-upper” or a foreclosed home is not appealing. 

Will home ownership stay out-of-reach for this generation?  We’ll have to wait and see. 

Though the current mortgage rate is slightly lower than its 10-year peak at the end of 2023, rates will need to continue to improve for homebuying to be seen as an attainable goal. Unfortunately, this generation just narrowly missed the 10-year-low rates that we saw in mid-2021. 

Several factors will have an impact on making homeownership achievable for Gen Z. A decrease in large companies purchasing available housing for short-term rentals (Airbnb, Vrbo) will allow for more affordable, long-term rental properties, while a mortgage rate decrease will lead to more affordable housing overall. 

We plan to keep our eye on it. Hopefully a future blog on this topic will tout progress in the right direction!