Homeownership by Age 25: Comparing Gen Z to their Parents

A new Redfin report shows 30% of Gen Zers reached homeownership by age 25 in 2022—compared to 27% of Gen X, 28% of millennials, and 32% of baby boomers at that age. 

From 2020 through early 2022, some Gen Zers were able to buy homes, thanks to record-low mortgage rates, giving them an edge over their parents’ generation—temporarily, at least. 

Alas, this year’s 25-year-olds don’t have it so easy. A formidable mix of volatile mortgage rates, high home prices, and near record-low inventory is making it far more difficult for home shoppers of every generation—but particularly the youngest—to buy real estate. 

Here’s what you need to know. 

Defying the narrative

This new finding would seem to defy the prevailing narrative that it’s harder for today’s twenty-somethings to buy a home than it was for older generations. And to an extent, it does, since 2022 was a challenging year all around for homebuyers and sellers alike–-thanks to the dramatic rise in mortgage rates early in the year. Inflation didn’t help, either. 

Fortunately, though, many of these Gen Z twenty-somethings had either bought a home in 2020 or 2021, when mortgage rates were low, or they nabbed one early in 2022, before those rates started climbing. So, when checking homeownership rates for 2022, Gen Z had already pulled ahead, thanks to pandemic rates. 

In 2021, Gen Z homeowners were spending the same portion of their household income on housing costs as older generations spent three decades earlier. That year, the median monthly mortgage payment for a 25-year-old was $1,013—16% of their $74,900 median income. 

In 1990, for comparison’s sake, the median monthly payment for a 25-year-old was $904—16% of their $69,419 median household income (adjusted for inflation). 

Thanks to today’s higher mortgage rates, 25-year-olds likely spend a larger portion of their income on monthly mortgage payments than those fortunate enough to buy a home in 2021. 

Riding the pandemic wave

During the pandemic, Gen Zers under 25 could get a conventional mortgage loan with a rate of 3.3% in 2020 and 3.1% in 2021. They also had the benefit of a strong job market and double-digit wage growth. Wages grew by 12% for Gen Zers aged 16 to 24—about double the increase for the overall working population. Incomes for young adults have risen more quickly, largely due to the increase in demand for labor during the pandemic. 

Other factors also helped this generation save more money to put toward a home of their own. 

The rising tide lifted Gen Z homebuyers in 2020 and 2021; they were part of the pandemic-driven homebuying frenzy. Record-low mortgage rates, remote work providing freedom to move somewhere more affordable and skyrocketing rental costs motivated some Gen Zers to break into the housing market. While the oldest of their generation had just graduated college when the pandemic started and hadn’t started building up their bank accounts, they had some financial advantages. The unemployment rate was near record lows in late 2021 and 2022, with pandemic-related labor shortages in industries that attract young workers like hospitality and retail prompting those employers to boost pay. Government stimulus payments, the pause on student loan repayments and the fact that many young adults lived with family during the lockdowns also helped Gen Zers save money.

Daryl Fairweather

Redfin Chief Economist

Gen Z advantages and caveats

Gen Z’s homebuying habits aren’t the same as those of millennials. For one, the younger generation is more likely to buy homes in affordable areas, while millennials favored tech hubs. 

Gen Z homebuyers also needed less money than those of older generations because they gravitate toward cheaper homes with smaller down payments. These buyers may also be more flexible about location and home size than older homebuyers, who are more likely to have children and to focus on homes in proximity to good schools and to their places of work.

In 2022, the typical primary home purchased by an under-25 buyer cost $235,000 and, assuming a conventional mortgage, came with a down payment of $10,000. Compare that to $355,000 (with a $30,000 down payment) for 25-34-year-old buyers and $405,000 (with a $50,000 down payment) for buyers aged 45 to 54. 

Today’s Gen Zers who don’t yet own a home may fall behind with homeownership, thanks to much higher rates, combined with home prices well above pre-pandemic levels—and near record-low inventory. Even those who can qualify for a loan with a low down payment will find it difficult to find a starter home or even a fixer-upper. 

It doesn’t help, either, that the Fed’s policy of interest rate hikes could cause a recession—or that the average Gen Zer has (even) more student loan debt than millennials. True, higher education could lead to higher-paying jobs for some of them. But, thanks to depressingly-low inventory, even those who can afford to buy a home may not be able to find one. 

Millennials track behind older generations

In 2022, 62% of 40-year-olds—millennials at the high end of the age range—owned their home, compared to 69% of baby boomers at age 40 and 64% of Gen Xers at that age. 

The gaps are even bigger for younger millennials. In 2022, 43% of 30-year-olds owned their home, compared with 52% of baby boomers and 49% of Gen Xers at age 30. 

At each of those ages, baby boomers lead the pack, and millennials trail behind (while Gen X is somewhere in the middle). 

Millennials have been financially unlucky. Their parents had a more straightforward financial journey. The oldest millennials entered the workforce during the 2001 recession. Then came the 2008 financial crisis, with many millennials in their first post-college job. It limited their earnings, overall wealth and ability to buy a home for many years afterward. Millennials started to gain homebuying momentum just before the pandemic, but they were once again dealt a bad hand with pandemic-related job losses in April 2020.

Daryl Fairweather

Redfin Chief Economist

Pieces of the homebuying pie

Based on the data Redfin has available, 26% of adult Gen Zers own their home—compared to 79% of boomers, who have the most homeowners of any generation, followed by Gen X with 71% and millennials with 52%. 

That said, millennials—combined with the oldest Gen Zers and the youngest Gen Xers—made up the largest share of homebuyers last year. Buyers aged 25-34 bought 33% of the primary homes that sold last year in the U.S., claiming the highest share of any age group. Buyers aged 35 to 44 came next in line, buying 27% of primary homes. 

Generally speaking, younger buyers tend to move more often and buy more homes than buyers of older generations—mainly because these buyers are just getting started with their careers and are more likely to move to different areas of the country to pursue opportunities—not to mention getting married and having children, which often means switching from renters to homeowners (when possible) and moving to more family-friendly neighborhoods. 

About half of the homeowners under the age of 35 own a particular home for less than three years—compared to 15% of 35-64-year-old homeowners and 7% of those 65 and older. 

Top takeaways for real estate agents

While Gen Zers may have had a larger share of 25-year-old homeowners than Gen X in 2022, today’s housing market conditions could change that. 

And since many younger buyers aren’t planning to stick around in the same house for a decade or more—or they can’t guarantee they will—the higher cost of buying and owning a home may not seem like a smart financial move right now. 

This is where you come in as the knowledge broker. Market conditions like the ones today’s homebuyers face are why it’s so important for you to understand what’s really happening and how it affects buyers and sellers—especially at a hyper-local level—so you can educate clients and prospects of all generations based on their goals as much as their means. 

Be the agent who helps them see through confusing headlines to the right decision for them.