BAM Key Details: 

  • A new report from Redfin shows Millennials and Gen Z taking out the majority of mortgages in 2023, with 39.7% of the year’s total mortgages issued to buyers under 35 years of age and 26.5% going to buyers 35-44. 
  • While only 26% of Gen Zers are homeowners, buyers aged 19 to 25 have a higher homeownership rate than Millennials and Gen Xers had at their age. 

A new Redfin report shows younger Americans were most likely to take out mortgages in 2023, with the lion’s share going to buyers under 35 (39.7%) and buyers aged 35-44 (26.5%). 

That’s according to Redfin’s analysis of Home Mortgage Disclosure Act (HMDA) data on last year’s primary home purchases. 

As for the rest of the year’s total mortgages: 

  • 16.1% were issued to buyers in the 45-54 age group
  • 10.8% to buyers aged 55-64
  • 5.4% to buyers aged 65-74
Redfin-Younger-Americans-most-likely-to-take-out-mortgages-graph

Source: Redfin

That breakdown of homebuyers by age hasn’t changed much over the last five years. Buyers of younger generations are still more likely to take out a mortgage, for several reasons. 

  1. Millennials and Gen Zers are aging into homeownership. The median age of first-time homebuyers in the U.S. is 35. Homeownership becomes financially feasible for buyers in their 20s and 30s; buyers in these age groups have had some time to save for a down payment and to build a strong credit history, enabling them to qualify for a mortgage. They may also be growing families of their own, further incentivizing a home purchase. 
  2. Many Americans see real estate as a safer long-term investment than the stock market or other traditional investment vehicles. Plus, it’s the one investment they can live in. 
  3. Younger Americans are more likely to take out loans for a home purchase rather than to pay in cash because they’ve had far less time, compared to buyers of older generations, to amass wealth or build equity from a previous home. Older buyers are more likely to buy a home with cash. 
  4. Younger buyers are also less likely to be deterred by high mortgage rates, largely because they’re less likely to be locked into a low mortgage rate with a current mortgage. Many have no experience of rates being as low as 3%, and the desire for homeownership is stronger than any argument for waiting until rates fall to 6% or lower.

2023 Homeownership rates by generation:

  • 26% of Gen Zers owned their home in 2023
  • 55% of Millennials
  • 72% of Gen Xers
  • 79% of Baby Boomers

Granted, Millennials and Gen Z have had less time than buyers of older generations to buy a home (let alone multiple homes). So, it’s not surprising that just over a quarter of Gen Zers are homeowners. 

That said, the youngest generation of homebuyers, those 19 to 25 years of age, has a higher homeownership rate than Millennials and Gen Xers had at the same age. 

One possible explanation for that is that some younger buyers are getting financial help from parents or other adult relatives to fund their home purchases: 

Percentage of younger homebuyers with a co-borrower over 55 on their 2023 mortgage loan:

  • 3.3% of buyers under 35
  • 2.8% of buyers aged 35-44

Younger homebuyers also receive cash gifts from older relatives to put toward their home purchase, according to a February 2024 survey commissioned by Redfin. 

Regional Differences in Mortgage Loan Distribution

In 2023, Millennial and Gen Z buyers took out the largest shares of the mortgages issued in relatively affordable Rust Belt metros: 

  • Pittsburgh: 48%
  • Cincinnati: 46.5%
  • Philadelphia: 46.3%
  • Detroit: 46.1%
  • Warren, MI: 46%

Florida retirement destinations, on the other hand, had the smallest shares of total mortgages going to Millennial and Gen Z buyers: 

  • West Palm Beach: 27.8%
  • Fort Lauderdale: 28.8%
  • Anaheim, CA: 31.7%
  • Orlando, FL: 32%
  • Las Vegas: 32.9%

Older millennials (35-44) accounted for the highest share of mortgages issued in pricey Bay Area metros: 

  • San Francisco: 37.8%
  • Oakland: 37.2%
  • San Jose: 37.1%
  • Newark, NJ: 34.5%
  • Los Angeles: 34.5%

One reason for this is the ultra-high price of homes in these metros, meaning buyers are more likely to be in their late 30s or early 40s when buying their first home. 

High housing costs and low inventory caused the total number of mortgages issued in 2023 to fall year over year. Here’s how that breaks down by age group: 

  • Under 35: 18% year-over-year decline in mortgages
  • 35-44: 22.7%
  • 45-54: 21.6%
  • 55-64: 20%
  • 65-74: 19.6%

Read the full report for more information, including metro-level stats and methodology.