As the age-old inquisition looms, who is the next generation to dominate the housing market? Is it Gen Z, or is it Millennials? From the recent findings in a 2022 NAR report, Millennials lead the way in homebuying. Since 2014, Millennials continue to be the largest percentage of homebuyers.
Who are Millennials and Gen Z?
Millennials were born between 1980-1998, while Gen Z was born between 1999-2011.
Millennials can also be broken up into Younger Millennials born from 1990-1998 and Older Millennials born from 1980-1989.
Some key insights about Millennials in 2022:
- Forty-three percent of homebuyers are Millennials (buyers 23-41 years old)
- Most Millennials were first-time homebuyers (81 percent of Younger Millennials, 48 percent of Older Millennials)
- Eighty-three percent of Millennial homebuyers are Caucasian, 7 percent are Hispanic/Latino, 6 percent are Asian/Pacific Islander, 5 percent are African American, and 2 percent are described as other
- Four percent are active in the Armed Forces, and 6 percent are Veterans
- Fifty-three percent rented before buying their home, and 28 percent owned a previous home
- Most purchases are for detached single-family homes (86 percent), and then a townhome/row house takes the next largest spot (7 percent)
What does this mean?
There is a significant number of homebuyers to be reached! While Millennials may share the exact reasons for homeownership as older generations, there is a new generation in reach. That demographic is Gen Z. As these early 2000s kids grow up, you can expect they will be the next massive force in homebuying.
Be on the lookout for Gen Z
Right now, Gen Z is only 2 percent of the homebuying and selling population, according to a 2022 NAR report. The oldest Gen Zer will turn 25 in 2022. This can be the peak buying age as they embark on their young adult lives, start their career, and move to a location where they begin to settle down.
While we understand that many in this generation are still young, reports show these individuals are saving money, budgeting, and wanting the best bang for their buck. Gen Z says establishing credit and saving money is a top priority.
In the next five years, 43 percent of Gen Z plan to purchase a home. As they mature over the next decade, the cohort seems to look forward to the stability of owning a home. With rental prices rising, 72 percent of Gen Z say they would prefer homeownership to long-term renting.
Contact your local Mortgage Loan Originator if you have questions about homeownership.