Just over one-quarter (26.3 percent) of adult Gen Zers owned a home in 2023, little changed from 26.2 percent in 2022, according to a new report from Redfin.
Meanwhile, the homeownership rate for millennials rose to 54.8 percent from 52 percent, and the homeownership rate for Gen X rose to 72 percent from 70.5 percent.
The rate for baby boomers was little changed (78.8 percent vs 78.7 percent in 2022), down from a record 79.7 percent in 2020, as some boomers have passed away or moved into retirement homes.
“Housing affordability remains strained, but things are looking up for Gen Z,” Redfin Chief Economist Daryl Fairweather said in a release. “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.”
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 percent for the first time since 2000 and housing prices remained 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, Redfin added.
The good news is that 2024 is shaping up to be a more affordable year for homebuying than 2023.
Mortgage rates have dropped from over 8 percent in October to 6.8 percent as of mid-January, pushing homebuyers’ monthly payments down more than $300 from their 2022 record high. Redfin said 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.
While the homeownership rate for adult Gen Zers has stagnated, a majority of them are still outpacing young people of the past.
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 percent, compared with 24.5 percent for millennials when they were 24 and 23.5 percent of Gen Xers when they were 24, according to Redfin.
This is likely because many Gen Z homeowners bought during the pandemic, when mortgage rates hit a record low. When many millennials were in their early 20s, many were struggling to find work due to the Great Recession, which made it harder to afford a home. And when Gen Xers were in their early 20s, they were grappling with some of the highest mortgage rates in history; for example, rates were around 11 percent in 1989, when the oldest Gen Xers were 24.
America’s youngest homebuyers are also financially savvy, which makes the process easier, said Jon Byram, a Redfin Premier real estate agent in Northern Virginia.
“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,” he said. “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 percent, below 31 percent for millennials at 26, 32.5 percent of Gen Xers at 26, and 35.6 percent of boomers at 26, Redfin data shows.