As Generation Z cautiously enters adulthood, its evolving relationship with housing is beginning to ripple across the U.S. real estate market. Born between 1997 and 2012, Gen Z faces a housing environment defined by high prices, elevated mortgage rates, and limited supply—conditions that are reshaping not only when and how they buy homes, but whether homeownership remains a central life goal at all.
While some Gen Zers are managing to break into the housing market, data suggest their progress is slowing. According to Redfin, just 26.1 percent of Gen Z owned homes in 2024, virtually unchanged from the year before and well below the homeownership rates of previous generations at the same age. Among the oldest Gen Zers, only one-third own homes today, compared with roughly 40 percent of their parents at a similar age.
This growing gap reflects more than financial strain—it signals a broader lifestyle and mindset shift that could have lasting implications for housing demand, family formation, and the types of homes built in the years ahead.
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Homeownership Delayed, Not Abandoned
Affordability remains the dominant barrier. Home prices are still far above pre-pandemic levels, and mortgage rates continue to hover above 6 percent. For many young adults, purchasing a home feels out of reach, even with steady employment.
Yet Gen Z’s slower entry into homeownership is not solely about economics. Unlike prior generations, many are deliberately redefining traditional milestones. Homeownership, marriage, and children are no longer viewed as sequential necessities but as optional steps to be taken on individualized timelines.
Industry experts note that Gen Z is less motivated by the conventional “starter home” narrative and more focused on flexibility, mobility, and experiences—values that influence their housing choices as much as price constraints.
A Generation Leaning Into Renting
With buying often unattainable or unattractive, Gen Z has embraced renting at unprecedented levels. In 2024, they accounted for nearly half of all renters who moved within the prior year, according to Multifamily Executive. By 2030, Gen Z is expected to become the largest renter demographic in the U.S.
Surveys indicate this is not merely a transitional phase. Nearly three-quarters of Gen Z renters view renting as a smarter option than buying, and a majority see it as a long-term lifestyle choice rather than a temporary step toward ownership. Flexibility, freedom to relocate for work, and the ability to prioritize travel and personal experiences are key drivers.
However, this preference comes with its own challenges. Despite recent stabilization, rents remain high, and nearly 60 percent of Gen Z renters are considered rent-burdened, leaving little room to save for a down payment. As economists note, when both renting and buying are expensive, upward mobility within the housing market becomes increasingly difficult.
Housing Costs and the Decline of Family Formation
The affordability crisis is influencing more than housing tenure—it is reshaping family formation itself. High costs, limited space, and a shortage of entry-level and family-sized homes are pushing many young adults to delay marriage and parenthood or reconsider those goals entirely.
Since 2019, national home prices have risen sharply, but the cost of space has increased even faster. The price per square foot has surged more than 50 percent, making larger homes disproportionately expensive. Starter homes are scarce, and family-sized properties often command steep premiums, particularly in desirable school districts.
This dynamic is exacerbated by what economists describe as a “housing ladder logjam.” Older homeowners frequently remain in large homes longer than necessary, reducing turnover and limiting availability for younger families. Combined with restrictive zoning and a persistent housing shortage, this misallocation keeps Gen Z renters locked out of ownership—and, in many cases, postpones family growth.
Smaller Households, Smaller Homes
As Gen Z delays homeownership and parenthood, experts anticipate a gradual shift in housing demand. Smaller households are likely to increase interest in condos, apartments, townhomes, and other compact housing options, while long-term demand for large, single-family homes may soften in some regions.
Developers are already responding. Over the past five years, the average size of newly built homes has steadily declined, driven by land constraints, rising construction costs, and affordability pressures. Despite smaller footprints, prices continue to rise, underscoring the depth of the supply-demand imbalance.
Slower population growth could eventually ease housing pressure, but experts caution that demographics alone will not resolve the crisis. Without increased construction, zoning reform, and better housing turnover, affordability challenges are likely to persist regardless of shifting household sizes.
The Rise of Co-Ownership and Multigenerational Living
One of the most notable trends emerging among Gen Z is the growing acceptance of shared ownership and multigenerational housing. Financial necessity, cultural openness, and pragmatic planning are driving more young buyers to purchase homes with their parents, siblings, or other family members or partners
Recent data shows that roughly one in four Gen Z homeowners bought property with their parents, while a growing share are purchasing with siblings or extended family. Builders are beginning to adapt by designing homes with multiple entrances, additional bathrooms, and flexible layouts that support roommates, rental income, or shared living arrangements.
Multigenerational homes may also become more common as aging parents and young adults consolidate resources to manage caregiving needs, property taxes, and insurance costs.
A Market Poised for Structural Change
Gen Z’s housing behavior reflects both constraint and choice. While affordability issues are delaying traditional milestones, the generation is also actively reshaping expectations around ownership, family life, and housing design.
Over time, these preferences could fundamentally alter the U.S. housing market—shifting demand toward rentals, smaller homes, co-owned properties, and flexible living arrangements. For policymakers, developers, and investors, understanding Gen Z’s priorities will be critical to addressing the nation’s housing challenges and building a market that aligns with the realities of the next generation.
Frequently Asked Questions
Why is Gen Z buying fewer homes?
High home prices, high mortgage rates, and limited supply make buying harder, leading many Gen Zers to delay ownership.
Does Gen Z still want to own homes?
Yes, but later in life and on more flexible timelines than previous generations.
Why does Gen Z prefer renting?
Renting offers flexibility, lower upfront costs, and easier relocation for jobs and lifestyle changes.
How are housing costs affecting Gen Z families?
High costs are delaying marriage, parenthood, and family expansion.
How will Gen Z change housing demand?
Demand may shift toward rentals, smaller homes, and condos.
Are builders adjusting to Gen Z trends?
Yes, by building smaller homes, townhomes, and flexible layouts.
Conclusion
Gen Z’s entry into the housing market is unfolding on very different terms than those of previous generations. Confronted with high prices, elevated borrowing costs, and limited supply, many are delaying homeownership while embracing renting, shared living, and alternative paths to stability. These choices reflect both economic pressure and a deliberate shift in priorities toward flexibility and quality of life.
