Here’s When Gen Zers Plan To Buy a Home — and How That Will Impact the Housing Market
Written by
J. David Herman
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Molly Sullivan
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For Generation Z’s prospective homebuyers, the timetables range from “within the next year” to “never.”
The demographic group born between 1997 and 2012 — also known as Zoomers, the iGeneration or just Gen Z — has faced strong headwinds as its older members have aged into potential homeownership. In a recent Insurify survey, about one-third of Gen Z respondents said they planned to buy within one to three years, and another 22% are eyeing four to six years. But 13% who said they want to buy a home doubt they’ll ever be able to afford it.
Another 5% said they don’t want to own a home and wouldn’t be able to afford it if they did. An additional 8% said they didn’t expect to buy a home for 10 or more years. On top of all that, nearly 50% of respondents listed housing costs as their most stressful financial issue, significantly higher than groceries, car expenses or other expenses.
How Did Zoomers Get Here?
“It’s almost like the perfect storm,” said Bola Sokunbi, the founder of Clever Girl Finance and the author of the My Wealth Plan financial workbook. “The combination of high interest rates, low housing inventory and older generations holding on to their homes all create major barriers for Gen Z trying to break into the housing market.
“Put all these factors together, and it’s easy to see why so many Gen Zers feel like homeownership is out of reach. They’re facing an uphill battle with fewer options, higher costs and tougher financial hurdles to clear.”
It isn’t just the cost of purchasing a house that has kept many members of Gen Z on the sidelines. There are related costs as well, such as homeowners’ insurance (up 20% from what it cost two years ago, according to Insurify).
As the director of member and consumer survey research for the National Association of Realtors, Brandi Snowden spends a lot of time with homebuyer data. She said the percentages reflect the challenges Zoomers face.
“We do see them making up a pretty small percentage of recent homebuyers,” said Snowden, citing figures of around 3%. “We’ll see this year if those younger buyers are able to become a bigger percentage of the market.”
The Federal Reserve’s first interest rate cut since 2020 — a plump half-point earlier this month — should help. But today’s rates are still well above the record lows of a few years back, which helped many millennials (the generation born between 1981 and 1996) get into the housing market.
On top of that, the lack of inventory and trend of few older homeowners downsizing may take a while to unwind, experts said.
“Many older homeowners are staying put instead of downsizing or selling, which reduces the turnover of properties that would typically be more affordable for younger buyers,” Sokunbi said. “I think that the pandemic and recent economic uncertainty have made older generations more cautious about moving, leading to even fewer homes entering the market.”
“We’ve seen a very competitive market for Gen Z,” Snowden added. “They’re going against repeat homebuyers who have that equity built up. Some of them can pay all cash, which fewer in Gen Z can do.”
Amid all the gloomy news, there are some positive signs. Snowden noted that in the NAR’s most recent year-over-year study, the share of overall homebuyers who were buying for the first time increased from 26% to 32%. A recent Redfin study noted that Gen Z actually has a higher rate of homeownership than millennials or even Generation X, if you compare all three generations at age 24.
“The fact that Gen Z is outpacing other generations in homeownership at age 24 is a surprising but positive sign,” Sokunbi said. “Maybe they’re finding creative ways to make it work, whether that’s moving to more affordable areas or getting help from their families. While affordability is still a major barrier, it shows that some in Gen Z are finding opportunities despite the challenges.”
Snowden also noted that many Zoomers are finding a way. Their persistence will likely contribute to a tight market for the foreseeable future, with inventory issues unlikely to be resolved anytime soon.
“They’re looking to alternate downpayment sources, receiving more gifts and loans from family and friends,” Snowden said. “They’re most likely to use stocks and bonds, 401(k)s and pensions. They’re making sacrifices, cutting back on clothes and delaying vacation plans.”
She added that many Zoomers are living with family and friends for longer periods while they save up for that elusive down payment.
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