Generational Shift in Housing: Boomers Lead, Gen Z Gains Ground
A recent analysis from Redfin, featuring a striking chart, highlights the disparities in homeownership among the last four generations, particularly between Baby Boomers and Gen Z. The chart illustrates how Boomers, after a slow start, have sustained high rates of homeownership, outpacing younger generations for the past three decades. However, Gen Z is showing a surprising early momentum in the housing market.
According to Redfin, over 26% of adult Gen Zers (aged 19 to 26) owned homes last year, surpassing the homeownership rates of Millennials and Gen Xers when they were the same age. The high rates of Gen Z homeownership are notable considering the challenges posed by soaring mortgage rates and persistently high home prices, a remnant of the pandemic-driven housing boom.
The analysis posits that many in Gen Z bought homes during the pandemic when mortgage rates were at historic lows. This contrasts with Millennials, who faced the Great Recession in their early twenties, and Gen Xers, who contended with high mortgage rates in the late 1980s.
However, there are nuances to consider. Financial assistance from family members and co-buying arrangements have played a role in enabling some young first-time buyers to enter the market. Furthermore, 26-year-old Gen Zers are slightly trailing behind previous generations in homeownership rates, with various factors, including financial independence from family, possibly influencing this trend.
Looking ahead, Redfin’s chief economist, Daryl Fairweather, predicts slight improvements in housing affordability this year, with a projected decrease in home prices and a decline in mortgage rates. These changes could offer more opportunities for Gen Zers. Nonetheless, the Baby Boomers' dominance in the housing market is unlikely to end soon.
Fairweather also notes that recent rent declines could help Gen Zers save for down payments, while the strong job market and the shift to remote work provide more flexibility to live in affordable areas. These factors may contribute to a more favorable environment for Gen Z’s continued progress in homeownership.
