Gen Z is snatching up houses in regional cities
Why it matters: The outlook for Gen Z isn't unlike that of millennials, a group that now includes more homeowners than renters.
- "Gen Z's really defining feature is coming of age during the pandemic," said Pamela Aronson, a sociology professor at the University of Michigan-Dearborn, who has studied the age group. "So the opportunities and the resources that are available will impact this generation."
- Some Gen Zers may have even fared better than millennials when they were the same age, according to 2023 RedFin data. In 2022, 30% of 25-year-olds owned their homes, compared to 28% when millennials were 25.
Driving the news: Gen Z — considered those born between 1997 and 2012 — made up more than 20% of mortgage requests last year in Salt Lake City, Oklahoma City, Birmingham, Indianapolis, Cincinnati and Louisville, a June report from LendingTree found.
- Minneapolis, St. Louis, Nashville and Kansas City, Mo., were other popular metro areas for interested home buyers.
- In historically less affordable cities like San Francisco, New York and Los Angeles, Gen Z made up less than 10% of requests.
- Although adult Gen Zers (ages 18 to 25) account for an average of 14.91% of potential homebuyers across the nation’s 50 largest metros, that figure will likely grow over the coming years as the younger members of the generation begin their adult lives, the LendingTree report said.
Yes, but: Gen Z made up only 4% of U.S. home buyers in 2022, according to a trends report by the National Association of Realtors.
- 49% of those buyers aged 18 to 23 said they owned a previous home, 21% previously rented an apartment or house and 21% lived with parents, relatives or friends and didn't pay rent.
- 10% said they were purchasing homes for a multigenerational household, which included adult siblings, adult children, parents and/or grandparents.
The big picture: Remote work changed young people's attitudes toward housing, said Gregg L. Witt, a marketing strategist who co-creates products, experiences and campaigns with Gen Z.
- The flexibility allowed people to feel comfortable moving to new cities or making choices for living that weren't based on a job, he said. Some people he works with have been moving frequently, to experience new areas, he added.
- The pandemic also led people to seek larger spaces, where they felt comfortable both living and working.
Reality check: High home prices and rents, steep interest rates and slow construction have all impacted affordability, per a report released Wednesday by Harvard University's Joint Center for Housing Studies.
- Student debt and high interest rates have prevented some people from making the step to own property, said David Howard, CEO of the National Rental Home Council.
"Homeownership, renting, housing arrangements — these things are obviously tied to finances, they're tied to career opportunities, they're tied to inflation," Aronson said. "All of those things are impacting what Gen Z is able to do."