Redfin Reports Gen Z’s Homeownership Rate Stagnated in 2023, But Millennials and Gen X Saw Gains

Rhea-AI Summary

A new report from Redfin reveals that 26.3% of adult Gen Zers owned a home in 2023, with millennials at 54.8% and Gen X at 72%. The homeownership rate for adult Gen Zers remained unchanged due to high mortgage rates and housing prices but is expected to improve in 2024 as mortgage rates have dropped. Despite the stagnant rate, Gen Zers are outpacing previous generations in homeownership. Financial savvy and family support are contributing to their success in the housing market.

Insights

Economist

The observed stagnation in homeownership rates among adult Gen Zers reflects broader economic trends and challenges facing the housing market. The plateau in homeownership rates for this demographic, despite a historically strong job market and remote work opportunities, underscores the impact of high mortgage rates and housing prices on affordability. The slight increase in homeownership rates for millennials and Gen X indicates a generational wealth accumulation that may not be as accessible to younger buyers. The economic implications suggest that while the housing market may experience increased activity due to lower mortgage rates, the long-term effects on generational wealth distribution and the potential cooling of housing prices warrant close monitoring.

Market Research Analyst

From a market research perspective, the shift in homeownership trends among generations can influence real estate market dynamics. The increase in new listings and the potential for price adjustments could lead to a more balanced market, benefiting buyers. However, the unique position of Gen Z, with higher rates of homeownership at younger ages compared to previous generations, may drive marketing and product development strategies for real estate companies. These companies could focus on providing resources and services tailored to young, savvy buyers, which could, in turn, impact the competitive landscape of the real estate industry.

Financial Analyst

Analyzing the financial implications, the sideways movement in Gen Z homeownership rates, coupled with the drop in mortgage rates, could present a mixed outlook for real estate businesses and investors. On one hand, lower mortgage rates may stimulate demand, potentially increasing revenues for companies involved in home financing and construction. On the other hand, if housing prices adjust downward, there could be a negative impact on home equity for current homeowners and a dampening effect on the mortgage-backed securities market. Investors should consider the potential for market volatility and the impact of demographic shifts on housing demand.

Still, most adult Gen Zers are tracking ahead of where their parents were at the same age, likely because many Gen Z homeowners were able to buy when rates were near record lows.

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Just over one-quarter (26.3%) of adult Gen Zers owned a home in 2023, little changed from 26.2% in 2022, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. Meanwhile, the homeownership rate for millennials rose to 54.8% from 52%, and the homeownership rate for Gen X rose to 72% from 70.5%.

The rate for baby boomers was little changed (78.8% vs 78.7% in 2022), down from a record 79.7% in 2020, as some boomers have passed away or moved into retirement homes.

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% for the first time since 2000 and housing prices remained stubbornly 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.

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% in October to 6.8% as of mid January, pushing homebuyers’ monthly payments down more than $300 from their 2022 record high. 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.

“Housing affordability remains strained, but things are looking up for Gen Z,” said Redfin Chief Economist Daryl Fairweather. “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.”

Most Adult Gen Zers Are Tracking Ahead of Where Their Parents Were at the Same Age

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%, compared with 24.5% for millennials when they were 24 and 23.5% of Gen Xers when they were 24.

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 twenties, 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 twenties, they were grappling with some of the highest mortgage rates in history; for example, rates were around 11% 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%, below 31% for millennials at 26, 32.5% of Gen Xers at 26, and 35.6% of boomers at 26.

To view the full report, including charts and methodology, please visit: https://www.redfin.com/news/homeownership-rate-by-generation-2023

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with same day tours, and our lending and title services help them close quickly. Customers selling a home in certain markets can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Customers who buy and sell with Redfin pay a 1% listing fee, subject to minimums, less than half of what brokerages commonly charge. Since launching in 2006, we've saved customers more than $1.5 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 4,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240117460175/en/

Redfin Journalist Services:

Ally Braun

206-588-6863

press@redfin.com

Source: Redfin

FAQ

What percentage of adult Gen Zers owned a home in 2023?

26.3% of adult Gen Zers owned a home in 2023, according to the report.

What is the homeownership rate for millennials and Gen X in 2023?

The homeownership rate for millennials was 54.8% and for Gen X was 72% in 2023.

Why did the homeownership rate for adult Gen Zers remain unchanged in 2023?

The homeownership rate for adult Gen Zers remained unchanged due to high mortgage rates and housing prices.

What is the expected outlook for the housing market in 2024?

The housing market is expected to be more affordable in 2024 as mortgage rates have dropped, pushing homebuyers’ monthly payments down.

How are Gen Zers outpacing previous generations in homeownership?

Despite the stagnant homeownership rate, Gen Zers are outpacing previous generations in homeownership due to their financial savvy and family support.