60% of Gen Z Do Not Believe Taking Out a Mortgage Is the Best Home-Buying Option: Here’s Why

Real estate agent showing house information to a special needs couple, sitting in the kitchen table.
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The traditional path to homeownership involves agreeing to 30 years of mortgage debt — but the youngest adults might be looking for a fork in the road. 

A new GOBankingRates survey of more than 1,000 people found that young adults between 18 and 24 are less impressed with mortgages than any other age group. Fewer than 5% of Gen Zers strongly agree that mortgages are the best solution for buying a home, and two out of three either disagrees, strongly disagree or are neutral on the subject.

Has Gen Z been priced out? Do they value homeownership differently than previous generations? Are they distrustful of banks — or something else entirely?

GOBankingRates asked the experts.

Gen Z Only Knew the Cheap Mortgage Era — Until It Ended

Ralph DiBugnara, president of Home Qualified and senior vice president of Cardinal Financial, works closely with millennial and Gen Z buyers. He saw them outpacing their immediate elders, only to pull back when rates rose because they had never before encountered expensive loans.

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“Gen Z is actually a generation that is ahead of the past generations in percentage of homeowners,” DiBugnara said.

He cited Redfin data showing about 30% of 25-year-olds own their homes, which is 5% more than when millennials were that age.

“I believe we are seeing two things amongst Gen Z buyers,” DiBugnara said. “First, they were able to buy earlier because they came into a market environment of low-interest rates. But this is also the only reality they knew, so with rates higher now, so soon after they were able to buy, they are hesitant to take on the debt.”

If They Can Ditch the Home-to-Work Commute, They Can Ditch the Home

High-interest rates aren’t the only post-pandemic shift that might be making young adults rethink the value of a mortgage. The concept of a house as a home base on the other end of the commute is changing, too.

“They, in a lot of cases, will not need to buy homes to support their in-office jobs or commutes, as a lot of the positions they are taking are remote or virtual,” said DiBugnara.

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Depending on how remote they want that work to be, a mortgage could be more of a burden than an investment. 

“The other buying trait they have shown is they want to be free to move around from state to state and in some cases, country to country,” said DiBugnara. “They will for sure on average start families later, so having roots somewhere is not on their priority list.”

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Gen Z Arrived Alongside the Home Crowdfunding Movement

Many Gen Zers never knew a time when you couldn’t organize online funding drives for just about anything. So it’s only natural that some of those who came of age in the crowdfunding era would leverage it for homeownership as adults.

“I have seen many Gen Zers go for crowdfunding to buy a house,” said Michael Doubinski, CEO of the portable home rental company PennyGranny. “It has become a well-known trend in the last few years.”

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Mortgage industry data and information provider HSH reported on it as an emerging concept as early as 2014, and sites like Feather the Nest and HomeFundIt specialize in crowdfunded down payment gifting.

They’re Also at Least a Decade Away From Peak Buying Age

Jay Garvens, business development manager and leader of Garvens Group of Churchill Mortgage and host of the “Jay Garvens Show” on KRDO 105.5FM, echoed DiBugnara’s opinion that Gen Z is wide open to the idea of homeownership, even if they’re not all ready for mortgages.

“Knowing that the median age for a first-time homeowner ranges from 33 to 36 years old, I would say Gen Z is actually ahead as a generation in terms of overall movement towards purchasing homes,” said Garvens. “After over 20 years helping people purchase homes, I see Gen Zers as being more independent than the millennials who came before them.”

Conventional wisdom says that if they aspire to homeownership, then they must be opting out due to rising costs — but it could just be that they’re young.

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“Many young adults are still in the early stages of their careers, and while they may aspire to own a home eventually, it’s not necessarily a priority right now,” said Dennis Shirshikov, head of growth for real estate investing site Awning.com and a finance, economics and accounting professor at the City University of New York. “As with any generation, Gen Z’s approach to homeownership will continue to evolve as they age and their financial situations change. It’s fascinating to observe these trends and consider what they might mean for the future of the housing market.”

Those Who Buy Young Tend to Have Help From Home

Like the generations that came before, many of those who are buying early are doing it with help from the original crowd funders — mom and dad.

“I have had several conversations and purchase transactions recently with Gen Z members, and I don’t see the conversations being much different than other generations,” said Garvens. “Except for the obvious fact that they are younger and almost always have their parents involved.”

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He told the story of a young woman who started work right out of high school to avoid college debt and bought a home at 23 through an FHA non-occupying, co-borrower loan with a parent. Another story involved a young restaurant manager who was able to save $70,000 — enough to convince his father to help him secure a mortgage. In another encounter, a 19-year-old got cold feet and dropped out of the home-buying process.

“He has no desire to settle into one place right now and the cost of living is outrageous, so he would rather go to a big city, make a solid income and rent with his friends while they ponder what they want to do with their lives,” said Garvens. “If this sounds familiar, it’s because millennials were saying the exact same thing 10 years ago.”

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