Millennials, Gen-Z Buy Homes Differently

Millennials and Gen-Z: Navigating the Path to Homeownership in 2024

Buying a home has long been considered a cornerstone of the American dream, but achieving this milestone can be particularly challenging for younger generations, such as millennials and Generation Z. With a backdrop of low inventory and high interest rates, both cohorts have had to adopt unique strategies to achieve homeownership. Here’s how these two groups are navigating the complex housing market.

Down Payments: The Biggest Hurdle

One of the largest obstacles for aspiring homeowners is saving for a down payment. This challenge is acutely felt by millennials and Gen-Zers. According to a recent survey by Redfin, 34% of respondents cited saving for a down payment as their biggest barrier to buying a home, second only to high home prices. While personal savings remain the primary source for down payments, many young buyers are exploring alternative funding methods:

• Second Jobs: 39% of millennials and Gen-Zers are taking on additional work to save for their down payments.
• Family Contributions: 36% of both generations are relying on cash gifts from family to help bridge the gap.

Solo and Co-Buying: Breaking Traditional Norms

Traditionally, married couples have dominated the home-buying market. However, younger generations are increasingly embracing non-traditional purchasing methods. A survey by Bankrate revealed that 42% of millennial buyers are choosing to go solo in their home-buying journey. Additionally, millennials are more likely to co-buy with friends, with 10% opting for this arrangement compared to just 3% of Gen-Xers and 1% of Baby Boomers.

Gen-Z, still early in their home-buying years, are also showing a strong preference for solo purchases. A generational trends report by the National Association of Realtors (NAR) found that 51% of Gen-Z buyers were single, with a significant proportion of these being female buyers (31%). Moreover, 59% of Gen-Zers are open to buying homes with someone who is not their partner, reflecting a pragmatic approach to achieving homeownership despite affordability issues.

Key Differences Between Millennials and Gen-Z

While both generations employ similar strategies to overcome housing market challenges, key differences in their home-buying patterns are evident:

• Age of Purchase: Millennials have become the largest group of homebuyers but tend to buy later, with the median age being 35. In contrast, Gen-Zers are entering the market earlier, with homeownership rates higher for 25-year-olds compared to millennials and Gen-Xers at the same age.
• Home Size and Affordability: Millennials, who are generally further along in their careers, often have larger incomes and can afford bigger homes. Conversely, Gen-Zers, many of whom are recent college graduates, typically look for smaller, more affordable properties with potential for future investment.

Adaptation and Innovation in Home Buying

Despite the financial hurdles and market challenges, millennials and Gen-Zers are demonstrating resilience and creativity in their quest for homeownership. Whether through taking on extra work, seeking family support, or opting for non-traditional buying arrangements, these generations are finding ways to achieve their dreams.

Learn More at the Smart, Adaptable, Green — What Today’s Homebuyer Wants Session

Understanding what today’s buyers are looking for and the role demographics play is crucial. Join Melanie McLane on Thursday, August 22, for an insightful education session on these topics. To register for the convention and trade expo, click here.

In today's competitive and expensive housing market, millennials and Gen-Zers are proving that with determination and innovation, the American dream of homeownership is still within reach.