young couple taking a moving boxes break

This article will ... Look at the factors affecting affordability for young homebuyers and share their solutions to cost challenges. Examine the features young homeowners are looking for (or settling on). Explain where Gen Z and young millennial homebuyers are purchasing properties and why.

Gen Z (those born from 1999 through 2011) and younger millennials (those born from 1990 to 1998) are starting to enter the homebuying market.

But they face availability and affordability challenges. That, plus lifestyle shifts, have affected what they are looking for when it comes to:

Home age
Home size
Living circumstances
Location

"Gen Z is looking primarily to secure a place,” said Cari McGee, a Realtor® with the Cari McGee Real Estate Team serving Kennewick and the Tri-Cities area of Washington state. “They know it's tough to do and only getting tougher. So, the primary objective is to buy a house that is manageable in terms of cost, style, and location.” (Check out: What to consider when buying your first home)

Housing affordability

There’s no denying today’s affordability challenges. Anyone trying to buy a home post-pandemic has confronted higher mortgage rates, and insufficient inventory has contributed to record-high housing costs.

In fact, home prices grew by 55 percent from the second quarter of 2020 through the second quarter of 2025 according to U.S. Federal Reserve data.

That has put the monthly payment for a starter home at 2025’s median price and interest rate at $2,212 for principal, interest, and private mortgage insurance, according to the 2025 Home Buyers and Sellers Generational Trends report from the National Association of Realtors (NAR).

At the same time, higher home values have pushed property taxes up, and weather-related disasters in certain areas have escalated homeowners insurance premiums.

And with recent bouts of inflation, mortgage rates have remained stubbornly high.

More expensive homes on smaller lots

These relatively short-term trends have exacerbated a much longer trend — houses becoming more expensive while offering less living room and space.

The median new home cost was about $64,000 in 1980, according to U.S. Census Bureau data, and median home size was 1,595 square feet.
Adjusted for inflation, that would be $243,134 in 2024, or $152.43 per square foot.
The median new home cost $420,300 in 2024 and was 2,210 square feet, or $190.18 per square foot.

Also, lot sizes have decreased from about 9,400 square feet in 2010 to about 8,400 in 2025, according to the National Association of Home Builders.

Young homebuyers’ wherewithal

The most common household income range for both Gen Z and younger millennial homebuyers was $100,000 to $124,999, according to NAR. Few Gen Z buyers had household incomes above $150,000 in 2023.

Younger millennials, unsurprisingly, tended to have higher household incomes than Gen Z, with 15 percent bringing in more than $200,000. This group is further along in their careers and more likely to be paired up with a spouse or partner.

“The only younger buyers I am seeing are those who have parents, or whoever their trusted elders are, heavily influencing them to buy instead of rent.”

More than 1 in 4 younger millennials said they had at least $30,000 in student loan debt, per NAR. And young homebuyers were more likely than older buyers to cite their existing high housing costs, student loans, or car loans as a barrier to saving up for a down payment. (Learn more: How to get money for a house down payment)

Yet, young homebuyers said debt delayed their purchase by a median of two years — significantly less time than any other generation, and on par with buyers age 79 and older.

Not everyone takes out a mortgage, even young buyers. However, 96 percent of young buyers in 2024 said they did, per NAR’s study. (See: Shopping for a mortgage? Do your homework first)

The median amount they financed was 90 percent. In other words, the median down payment was 10 percent. Only 5 percent put an inheritance toward their down payment.

One in 3 younger millennials received a gift or loan from a friend or relative to help with the down payment. (Related: Is borrowing money from your parents a good idea?)

Home age

“These buyers tend to be more open to homes that are not already updated,” Reynolds said. “They understand the value of a discounted house and other stepping-stone opportunities like a condo or townhouse.” (Learn more: Tips for first-time condo or townhouse buyers)

Indeed, NAR found that Gen Z and younger millennials tended to purchase older homes than other buyers during its July 2023 through June 2024 survey period. They cited “better price” and “better overall value” as the most common motivations for doing so. They were more likely than any other age group to buy homes built before 1962.

That said, fixer-uppers aren’t as appealing as they were before 2020 due to higher material and labor costs.

Only 9 percent of younger millennials bought new homes, per NAR. A skilled labor shortage has increased project timelines and reduced the supply of new construction, according to research published in 2025 by the Home Builders Institute and the University of Denver.

“Younger buyers' primary concern is getting a house, and they are less concerned with getting the house,” McGee said.

“Elder millennials and older buyers are more concerned with what will work for their lifestyle,” she noted. “Do they need more room, less room, one level, a fenced backyard, a garage, a particular location? They have the age, income, and equity earned from an earlier purchase that gives them the luxury of considering those factors.”

Home size

Younger buyers tended to buy homes under 2,000 square feet, while older buyers were more likely to choose larger homes.

While buyers of all ages favored stand-alone single-family homes in NAR’s survey, younger buyers were more likely to purchase townhomes or condos than most older buyers.

Also, younger buyers were more likely to say they expected to keep the home for five or fewer years. That said…

● About a quarter expect to own the home for eight to 10 years.

● About a third expect to own it for 16 years or longer.

Across all age groups, three-bedroom, two-bathroom homes are the most common, per NAR. But younger buyers prefer a somewhat more contemporary aesthetic than older buyers, who lean more toward traditional styles, according to the National Association of Homebuilders.

Who are young homebuyers living with?

“The biggest change I see today from young buyers I worked with in the past is that today they all want room for a dog or cat,” Reynolds said. “I am also seeing younger couples who are not married buy together, with their families guiding them to set up trusts in case there were to be a split in the relationship.” (Learn more: Unmarried couple buying a house: Pros and cons)

NAR’s study also found that:

● 13 percent of younger millennial buyers and 10 percent of Gen Z buyers were unmarried couples.

● The largest percentage of buyers in both groups was married couples.

● Most buyers in both groups did not have children.

● Nearly 1 in 3 Gen Z buyers were single women. (Related: 5 tips for single women buying their first house)

● Only 17 percent were single men.

Seven percent of younger millennials bought multigenerational homes, typically to save money and to spend more time with and help aging parents.

Multigenerational households have become increasingly common, growing from about 5 percent of households in 1971 to about 17 percent in 2022, according to the Pew Research Center. Nearly one-third of 25- to 29-year-olds lived in multigenerational households in 2021, often with their parents.

Some young homebuyers are even going in on the purchase with friends to make home ownership affordable.

Similar to buying a home with a romantic partner who isn’t a spouse, these arrangements are best approached with legal and financial protections in place in case one party wants to sell or the relationship sours.

There are even fintechs that facilitate such purchases (though buyers would still be wise to hire their own, independent attorneys and financial planners to protect their interests throughout the process).

Location

Young homebuyers are no different than older generations in that almost half of them are buying homes in the suburbs, according to NAR. Neighborhood quality is their top priority.

Despite the work-from-home revolution, most people still have to leave the house to do their jobs. Younger millennials value proximity to work more than any other generation, according to NAR’s study.

Gen Z may be more likely to become homeowners in Midwestern and Southern cities with home prices well below the national median.

In 2024, the cities with the highest share of Gen Z mortgage applicants (each at around 20 percent) were all in the Midwest:

● Des Moines, Iowa

● Omaha, Nebraska

● Youngstown, Ohio

● Dayton, Ohio

● Grand Rapids, Michigan

According to Cotality, a mortgage data company, the median home price in those cities ranged from $136,000 in Youngstown to $306,000 in Grand Rapids.

A separate 2024 analysis by Lending Tree found that seven of the 10 cities with the most Gen Z mortgage applicants were in the Midwest.

Protecting a home investment

Buying a first home is an exciting milestone. It also comes with financial challenges and commitments that require thinking several steps ahead — including long-term planning to protect your investment.

A term life insurance policy can help ensure that if something happens to you, your loved ones won’t struggle to keep the home you worked so hard to purchase.

To explore your options, consider speaking with a MassMutual financial professional, who can help you find coverage that fits your needs and your budget.

Discover more from MassMutual…

Calculator: How much life insurance do I need?

Often-overlooked considerations when buying your first house

Owning vs. renting: A guide for renters considering homeownership

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What younger homebuyers want