Gen Zers are breaking into the housing market, despite ongoing affordability challenges and an increasingly uncertain economic landscape, but experts warn that they are losing momentum.
Last year, 26.1 percent of Gen Zers owned their home, according to Redfin, essentially flat from the rate of 26.3 percent reported in 2023. Compared to all previous generations except millennials, they are also trudging behind. Only 33 percent of oldest Gen Zers own their homes now compared to roughly 40 percent of their parents at the same age, showing that buying a home has become harder or less attractive in the U.S.
Faced with a market where the odds seem stacked against them, Gen Z, made up of people born from 1997 to 2012, is looking at homeownership and home-buying differently than previous generations of Americans. But affordability issues and the struggle to become homeowners is also, in turn, shaping Gen Zers.
Leaning Into the Rental Market
As home prices remain much higher than they were before the pandemic and mortgage rates are still above 6 percent, despite recent declines, buying property is not an option for many Gen Zers. A majority of those who leave the family nest prefer to lean instead into the rental market.
In 2024, according to data reported by market analysis site Multifamily Executive, Gen Zers represented 47 percent of recent renters who had moved in the previous year. By 2030, according to lender and loan servicer ARBOR, they are expected to become the largest demographic of renters in America.
A recent survey by multifamily focused property management company Entrata found that nearly three in four Gen Z renters view it as a smarter option than buying. And while 41 percent of respondents saw renting as a steppingstone to homeownership, 59 percent saw it as a long-term choice.
A majority of 83 percent said that renting allows them to save for life experiences—something that, as a generation, they cherish over material possessions.
“What the survey told us about Gen Z, is that renting is a great way of life for them,” Entrata’s industry expert, Virginia Love, told Newsweek. “While homeownership is something they want at some point in life, they are sort of rewriting their timeline. They don’t feel like they need to follow the whole ‘college, marriage, baby, house, bigger house’ timeline; they can create whatever life they want.”
Renting also allows Gen Zers to be flexible around where they want to live and work. In a slowing job market, being able to move for a job can make the difference between employment and unemployment.
But rental prices have also gone up since the pandemic, though they have since stabilized much more than home prices. According to a 2024 survey by real estate site Zillow, 58.6 percent of Gen Z renters were rent burdened in 2022—the biggest share among all generations.
“The issue with that is that buying a home is very expensive and renting is expensive, meaning that any money that you would want to save up for a down payment or to purchase a home, it’s hard to save,” property services firm Cotality’s chief economist Molly Boesel told Newsweek. “So I’m not sure how that’s going to work out for them. But I think, again, a lot of those, the homeownership dream will be pretty delayed with Gen Z.”
Fewer Homes, Fewer Families
The struggle to become homeowners and find the right home is also having an impact on young people’s ability and desire to form their own families.
“The current affordability crisis has put young people in a bind, especially those looking to settle down and start a family,” Realtor.com senior economist Jake Krimmel told Newsweek. “Starter homes are scarce and family-sized homes command a steep premium.”
According to Realtor.com research, since 2019, the national median list price is up 36 percent, but the cost per square foot has surged more than 51 percent, “and that’s before even accounting for higher mortgage payments,” Krimmel said. “So it’s not just the price of a home that’s gotten more expensive, it’s also the price of ample space to raise a family.”
Krimmel points at a “misallocation of housing” as a potential culprit as well, keeping younger buyers off the property ladder.
“When empty nesters hold onto large three- and four-bedroom homes, it creates a logjam on the housing ladder. When older households remain in homes they no longer fully need, younger families get stuck in starter units or rentals longer, delaying or downsizing their family plans,” he said.
“This dynamic is compounded by the nationwide housing shortage and restrictive zoning, which, if relaxed, could ease the housing ladder traffic jam and improve affordability.”
Because affordability shapes household formation, access to homeownership and family formation are deeply intertwined, Krimmel said.
“Owning a home often alters the economics and logistics of starting a family and having kids. Homeownership offers housing stability, predictable living expenses, forced savings, and typically more usable space. It also helps explain fertility patterns in periods of rising prices,” he added.
“People often look to buy a home when they’re ready to expand their family,” Chen Zhao, Redfin’s head of economic research, told Newsweek. “Housing affordability is likely making some young adults delay or reconsider family formation,” she said.
“Some people may not want to have children until they can afford to buy a home of a certain size or in a specific location—for example, in a specific school district. High rents and high mortgage costs also eat into disposable income, making it harder to budget for child-related expenses,” she said.
“People who already have children may also decide to not have more children without being able to buy more space or feel like they can free up enough budget to pay for the additional expenses.”
Research has shown that higher house prices, as we have now, affect families differently depending on tenure, Krimmel said. “For owners, rising equity makes them more likely to have kids, while for renters, higher prices put ownership further out of reach, lowering the odds of family formation.”
Trend Toward Smaller Homes and Co-Ownership
A sustained decline in birth rates among younger generations could reshape housing demand, according to experts.
“Smaller households may reduce demand for larger, family-sized homes over time and increase interest in smaller units, condos, or rentals,” Zhao said. “Regions that depend on family in-migration and school-age populations could face weaker housing demand, while urban centers or retirement-oriented communities might see relative strength,” she added.
“Over the long run, slower population growth translates into slower housing demand growth, which could help ease supply shortages, but also alter the mix of housing that’s most in demand.”
For Krimmel, not even declining birth rates would solve the current affordability crisis, which is based on a profound mismatch between supply and demand.
“The core issue is supply, not demand. With capital gains tax rules keeping empty nesters in unnecessarily large homes and supply regulations preventing the market from building in many highly-desirable towns and suburbs, family-sized inventory could remain locked up and scarce even as fertility falls,” he said.
“Over time, fewer kids could shift demand toward smaller homes, but without more flexible building and better turnover, today’s affordability crisis won’t resolve on demographics alone.”
Developers are already building smaller homes for affordability reasons. Cotality’s data show that the size of new homes fell 10 square feet per year over the last five years due to supply issues, land prices and regulation. Home prices, though, have continued rising.
“There’s a trend toward smaller homes,” Boesel said. “Not only we’ll need more accessible, smaller homes for the newer households coming in, but also for the older generation, some of them who are on fixed income,” she said.
“Those households will probably need to live somewhere where they can afford not only their monthly payment, but higher property taxes and insurance.”
Boesel expects that, in the coming decades, there will be a push for multigeneration homes as older generations and younger generations might reunite under the same roof to meet caring and financial challenges.
There will also likely be a push for homes that can accommodate co-ownership, a rising trend among younger generations. Roughly a quarter of Gen Zers purchased homes with their parents, according to a recently released Bank of America report, while 22 percent bought their homes with siblings, up from 12 percent in 2024 and 4 percent in 2023.
“I think that, at least in the next 10 years, builders will want to build some smaller homes that might include attached housing, townhomes, those sorts of things,” Boesel said. “And when they build these town homes, they’ll probably want to think about having them so a younger person can have roommates, or even a family could rent out part of the home, thinking about having that extra income from a rental,” she said.
“So, they might want to build more separate entrances, more bathrooms, that kind of thing—spaces that can be shared by people who aren’t related to one another.”
Read the Entire Interview With Cotality’s Molly Boesel:
How are Gen Zers approaching the housing market?
“Right now, the average Gen Z is still pretty young at 21. They’re pretty far from even thinking about owning a home, right? Many of them still go to college or probably are just graduating soon. Actually, I have a 21-year-old, and she’s got half a year left at university and then she will most likely move. So you’re going to have a lot of that generation still living at home now.
I think they’ll approach it a lot like the millennials have, meaning they will most likely be delayed, specifically right now as the job market is slowing in the U.S. Those graduating from college most likely will have a delay in moving out and forming their own households. Millennials sort of got married a lot later than my generation did, and my parents’ generation thought the same of mine, though it was not so late compared to when millennials got married.
And I mentioned marriage because that’s one of the first kinds of milestones Americans want to reach when they want to form a household. And then that would lead to maybe some home ownership.
Why I say Gen Z is going to be a lot like the millennials, is because housing right now in the U.S. is incredibly expensive. And it’s not just for-sale housing that’s expensive. Rents have gone up over the same period of time, in the last five years. So the issue with that is buying a home is very expensive and renting is expensive, meaning that any money that you would want to save up for a down payment or to purchase a home, it’s hard to save. So I’m not sure how that’s going to work out for them. But I think, again, a lot of those, the homeownership dream will be pretty delayed with Gen Z.
How are homebuilders reacting to a change in demand, also among Gen Zers?
We’ve seen an increase in townhomes being built. I think that, in the next 10 years, builders will want to build smaller homes that might include attached housing, townhomes, those sorts of things. And when they build these town homes they’ll probably want to think about having them so a younger person can have roommates or even a family could rent out part of the [home], thinking about having that extra income from a rental. So, more separate entrances, more bathrooms, that kind of thing. Spaces that can be shared by people who aren’t related to one another. We have seen an increase in smaller homes being built and townhomes as well.
Not only we’ll need more accessible, smaller homes for the newer households coming in, but also for the older generation, some of them who are on fixed income. Those households will probably need to live somewhere where they can afford not only their monthly payment, but higher property taxes and insurance.
Do you think your Gen Z daughter will have a harder time than you buying a home?
I bought quite a while ago and I haven’t moved because things are expensive, but it was a little bit of a stretch to afford the home I’m in, but it was not out of reach. I’m in an inner suburb, very close to the Washington, D.C. area, so if she were to think about purchasing now—I was maybe in my late 20s when I purchased, early 30s.
If she wanted a similar sort of [home], she was at the same kind of level, just starting out, maybe working for a few years, she’d probably need to move further out or buy something a lot smaller. So I think it’s just the affordability compared to what we were facing. [Home-buying] is much more of a hurdle.
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