As Gen Z enters adulthood, the generation born between 1997 and 2012 faces a unique set of financial challenges. Yet, despite hurdles like high housing costs and economic uncertainty, the future is far from bleak for this digitally savvy and resourceful cohort.
While only 26.3% of adult Gen Zers are homeowners—compared to 54.8% of millennials and 72% of Gen Xers—a closer look reveals that more Gen Z adults own homes than their millennial and Gen X counterparts did at the same age. Armed with determination and creative strategies, Gen Z is making strides toward homeownership.
The Financial Landscape for Gen Z
It’s often assumed that Gen Z cannot afford homes, as many still rely on parental financial support for essentials like rent, groceries, and health insurance. A 2024 Bank of America report found that 54% of surveyed Gen Z adults require some financial assistance. However, data from NeilsonIQ shows that this generation is poised to become the wealthiest ever, with the average 25-year-old Gen Zer earning $40,000 annually—more than millennials and baby boomers did at their age, when adjusted for inflation.
Getting Ready for Homeownership
Experts emphasize that preparation is key to successful homeownership. Sean Adu-Gyamfi, a licensed real estate broker, cautions Gen Z against relying on social media “real estate gurus” who oversimplify the process. Instead, he urges prospective buyers to consult professionals such as real estate agents, attorneys, lenders, and contractors to gain a full understanding of the costs and responsibilities involved.
John Gluch, owner of Gluch Group, advises Gen Z buyers to carefully assess their finances, including savings, monthly affordability, and down payment options. While the conventional wisdom of a 20% down payment still applies, alternative options such as FHA and VA loans can allow for smaller down payments, making homeownership more accessible. Gluch recommends exploring these options and securing preapproval to strengthen offers during the buying process.
Budgeting Beyond the Mortgage
Buying a home involves more than just the mortgage payment. Karen Kostiw, a licensed real estate salesperson, stresses the importance of budgeting for closing costs, maintenance, property taxes, and insurance. She also advises buyers to prepare for after-closing expenses like furniture, home improvements, and unexpected repairs by setting aside a rainy-day fund.
Large purchases on credit during the mortgage qualification process can hinder approval, so careful planning is essential. Kostiw suggests having a two-year financial cushion to manage unexpected costs and capital improvements.
Considering Lifestyle and Future Needs
Lifestyle compatibility is a critical factor for first-time buyers. Kostiw recommends evaluating location amenities like proximity to work, social activities, parks, and grocery stores to ensure a good fit. Additionally, buyers should consider how their needs may evolve over time. Whether due to career changes, family planning, or other life events, purchasing a home with extra space can offer valuable flexibility.
Thinking Long Term: Resale Value
While it may seem premature to consider selling a home before even purchasing it, understanding resale potential is an important part of the buying process. Gerard Splendore, a real estate broker, advises Gen Zers to research how a property’s value might hold or increase over time. Although the future is unpredictable, factoring in appreciation potential can help ensure a sound financial investment.
Creative Solutions for Homeownership
In today’s competitive housing market, creativity can make a big difference. Housing expert Dan Hnatkovskyy encourages Gen Z to challenge the myth that only the wealthy can afford homes. Exploring options like co-purchasing a property with a nonromantic partner is one strategy gaining popularity. According to a Risk Strategies survey, nearly 15% of Americans have co-purchased a home with someone they aren’t romantically involved with, and 70% of Gen Zers are open to the idea. Shared ownership reduces financial strain and allows multiple parties to share responsibilities.
A Generation Ready to Make Its Mark
Gen Z’s journey to homeownership may look different from that of previous generations, but it reflects their resilience and adaptability. By preparing financially, researching the market, and considering innovative solutions, Gen Z is carving its own path toward achieving the American dream of owning a home.
