While the Baby Boomer generation remains the largest generational cohort of active homebuyers (39% of all purchases), Gen Z has now surpassed Millennials and Gen X in homeownership, according to a recent Redfin study. The research indicates that approximately 30% of 25-year-old Gen Z individuals owned their home in 2022, slightly ahead of Millennials (28%) and Gen Xers (27%) when they were at the same age.
Gen Z’s homeownership boom is partially a result of their focus on affordable areas away from core luxury urban markets. Gen Zs capitalized on both the low mortgage rate environment of 2020 and 2021 and their ability to adapt to remote and hybrid work arrangements, which allowed them to explore locations where housing prices are more accessible and buyer competition is less intense.
Amid the pandemic, the tight labor market enabled this generation to quickly build their wealth, with wages rising by 12% in 2022 — at a rate double that of the overall population. The significant wage increase for this generation further propelled Gen Z’s journey to homeownership.
The experience of Millennials, who entered the workforce in the period between the 2001 recession and the subsequent 2008 financial crisis, have shaped their financial journey. Gen Z’s advantageous position having purchased homes during the recent purchasing boom, allows them to navigate the current housing market more comfortably.
How do their purchase patterns differ from other generations, and how might this shape the real estate market and trends going forward? Fundamentally, location is still paramount, but aesthetics and environmental footprint outweigh the need for space. In a constrained inventory market, will Gen Z’s rising share of purchase volume continue to hold, or will the economic pacing of a recovery favor other generations more? Share your thoughts!
