Homeownership Race: Gen Z Outpaces Parents, Millennials Struggle to Catch Up
Gen Z's homeownership rate is ahead of their parents' generation, with 30% of 25-year-olds owning their homes in 2022. This surpasses the 27% rate for Gen Xers at the same age. However, Gen Zers who missed out on the low mortgage rates during the pandemic might find it challenging to catch up. Meanwhile, millennials lag behind their parents, with 62% of 40-year-olds owning homes in 2022, compared to the 69% rate for baby boomers at the same age.
Despite this, millennials account for the largest share of home purchases, with 25-44 year olds buying around 60% of homes sold over the last few years. Gen Z homebuyers are most common in affordable regions like Virginia Beach, while millennial buyers are prevalent in job hubs like Seattle.
Gen Zers who bought homes during the record-low mortgage rates in 2020 and 2021 have set themselves on a better homeownership trajectory than their parents. However, those who didn't buy homes during this period may struggle due to rising housing costs and a potentially slowing economy.
Although Gen Z is currently on track with their parents' homeownership rate, many hurdles remain. Low mortgage rates in the last few years have enabled some Gen Zers to buy homes with relatively low incomes, but with rates now above 6% and home prices still well above pre-pandemic levels, many may find it increasingly difficult to enter the market. The Fed's interest-rate hikes may also lead to a recession, setting the generation back financially.
Contrarily, millennials trail behind their parents' homeownership rates, with only 62% of 40-year-olds owning homes in 2022 compared to 69% of baby boomers at the same age. Younger millennials are also lagging, with just over two in five (43%) 30-year-olds owning homes in 2022, compared to approximately half of baby boomers (52%) and Gen Xers (49%) at the same age.
Despite these challenges, millennials make up the largest share of home purchases, with people aged 25-34 buying one in three (33%) primary homes sold in the U.S. last year. Gen Zers, although representing a smaller share, are still active in the homebuying market, with people under 25 buying just over one in 20 (6%) homes sold last year.
While Gen Z has managed to outpace their parents' generation in terms of homeownership rates, they still face significant challenges in the housing market. Millennials, on the other hand, continue to struggle to catch up to their parents' homeownership achievements but remain the most active generation in purchasing homes.
