Home Buying Trends Among Millennials and Gen-Z

Millennials have emerged as the largest demographic of home buyers, but they tend to enter the market later, usually starting at around 35 years old. In contrast, Generation Z is making their move much earlier, beginning at just 25.

In the United States, the journey to homeownership remains a significant aspiration for many, yet it can be particularly daunting for younger generations like millennials and Gen-Z. With challenges such as limited housing supply and rising interest rates, these groups have adapted their strategies for purchasing homes compared to earlier generations. Below are some key trends in how these two cohorts are navigating the housing market.

Down Payments

One of the most substantial barriers to homeownership is the down payment. Millennials and Gen-Z are feeling this pressure acutely, as many struggle to accumulate sufficient savings. A recent Redfin survey indicates that, aside from high home prices, 34% of respondents cite saving for a down payment as their primary obstacle. While many are relying on personal savings, a significant portion—39% of both Gen-Z and millennials—have taken on additional work to meet their down payment goals. Additionally, 36% of individuals in these generations anticipate receiving financial gifts from family members to help cover their down payments.

Solo and Co-buying Trends

Traditionally, married couples have dominated the home-buying landscape, but this trend is shifting among younger generations. An increasing number of millennials are opting to buy homes independently, with 42% choosing to do so alone, according to a Bankrate survey. This figure contrasts sharply with just 10% of millennials who are purchasing homes with friends, compared to 3% of Gen-Xers and only 1% of Baby Boomers. Even though Gen-Z is just starting to enter the market, they too are inclined to purchase homes solo rather than waiting for a partner. A National Association of Realtors (NAR) report highlights that 51% of Gen-Z buyers are single, with 31% being female. Additionally, 59% of Gen-Zers are open to co-buying with someone who is not a romantic partner, showcasing their willingness to explore alternative paths to homeownership despite financial challenges.

Distinctions Between Millennials and Gen-Z

While both generations employ similar strategies in their home-buying endeavors, they also exhibit distinct differences. Millennials, who have become the predominant home-buying group, tend to delay their purchases, with the average age being 35. Conversely, Gen-Z buyers have entered the market earlier, achieving homeownership rates at age 25 that surpass those of millennials and Gen-Xers at the same age.

Home size also plays a critical role in the buying decisions of millennials, who, being further along in their careers, often have higher incomes and can afford larger properties. In contrast, many Gen-Z buyers, often fresh out of college and facing lower income levels, tend to seek smaller, more affordable homes that could potentially serve as investment opportunities in the future.

For both millennials and Gen-Z, finding innovative methods to secure homeownership is crucial in today’s challenging market characterized by high prices and interest rates. Whether they require additional support or choose to navigate the process independently, the dream of owning a home continues to motivate these generations.

Bottom Line

As homeownership evolves, both Millennials and Gen-Z are adapting to the challenges of the housing market in unique ways. While Millennials may focus on larger properties and delayed purchases, Gen-Z is embracing earlier homeownership and alternative buying methods. Understanding these trends can help real estate professionals better cater to the needs of these dynamic generations.