Can Gen Z Still Own a Home? Predictions, Problems, and the Path Forward with Housing

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The Future of Housing: Why Gen Z May Never Own a Home — And What Comes Next

The dream of owning a home used to be a cornerstone of the American Dream. For Gen Z and the generations behind them, that dream is quickly evaporating.

Between inflated prices, stagnant wages, and rising interest rates, many young Americans are being shut out of the housing market altogether. But this isn’t just a short-term affordability crisis — it’s a long-term structural shift that’s already underway.

Let’s break it down, starting with how we got here.

 What 2008 Taught Us About Housing Shortages

After the 2008 financial crash, homebuilding slowed to historic lows. The burst of the housing bubble wiped out countless construction firms, and banks became extremely cautious with lending for new development. Between 2010 and 2020, the U.S. underbuilt by an estimated 3.8 million homes (Freddie Mac), creating the housing shortage we still feel today.

This lack of new construction meant that when demand surged in 2020–2022, there simply weren’t enough homes to go around — fueling the price explosion.

How 2020’s Housing Boom Broke the Market

In response to the COVID-19 pandemic, the Federal Reserve slashed interest rates to near-zero levels to stimulate the economy. This monetary policy led to a significant drop in mortgage rates, with the 30-year fixed rate falling below 3% by July 2020 and reaching a record low of 2.65% in January 2021 .(The Mortgage Reports)

The combination of low borrowing costs and increased demand for housing—driven by remote work and a desire for more space—resulted in a housing market frenzy. Home prices surged, with the Case-Shiller National Home Price Index reporting a 47% increase since 2020 . (Yahoo Finance+1New York Post+1)

This rapid appreciation outpaced income growth, pushing the median home price to approximately five times the median household income, compared to the historical norm of three times . (NPR)

Remember when?

 Fast Forward to 2025: Sellers Still Think It’s 2021

As of 2025, mortgage rates have risen significantly, with the average 30-year fixed rate hovering around 6.81% . This increase has effectively doubled monthly mortgage payments for many buyers compared to the rates in 2020. (YCharts+1Business Insider+1)

Despite the higher borrowing costs, many sellers continue to price their homes based on the peak valuations of 2021–2022. This disconnect has led to a slowdown in the market, with homes taking longer to sell and an increase in price reductions. In New Jersey, for instance, townhouse-condos are now taking an average of 51 days to sell, up 30.8% from the previous year . (New Jersey Real Estate Network)

Nationally, inventory levels are rising, with 20 of the 50 largest U.S. metropolitan areas surpassing pre-pandemic listing levels as of April 2025 . However, the "lock-in effect"—where homeowners with low-rate mortgages are reluctant to sell—continues to constrain supply. (Axios+1New York Post+1)

Prediction #1: A Pricing Correction is Inevitable

Baby Boomers, who currently own 38% of U.S. homes, are beginning to age out of homeownership . As they pass away or move into retirement communities, a significant number of properties are expected to enter the market.New York Post

However, younger generations, particularly Gen Z and Millennials, face affordability challenges. In 2024, only 26.1% of Gen Zers owned their homes, a figure that has remained relatively flat over the past few years . Additionally, nearly half (47%) of potential buyers report being unable to afford a home in 2025, with 24% of this group being Gen Z .Redfin CorporationIPX1031

This mismatch between supply and demand is expected to lead to a pricing correction, a hopeful prediciton for many if this comes to pass. Zillow projects that U.S. home prices will decline by 1.7% between March 2025 and March 2026 . While not a crash, this adjustment reflects the market's response to shifting demographics and economic realities. (ResiClub Analytics).

What can we expect if this trend continues? Lower housing prices of course, even if interest rates fall.

Prediction #2: The Rise of the Renter Nation

An alternative scenario is the consolidation of homeownership within families, where properties are passed down through trusts or LLCs, or perhaps even more troubling- the development investor corporations who are buying homes in large quantities to rent out . This trend could lead to a society where homeownership is increasingly concentrated among those with generational wealth & corporate owned rental properties, while others remain renters.

Currently, 42% of home purchases are made by Baby Boomers, many of whom pay in cash, further sidelining younger buyers. This dynamic contributes to the formation of a "renter class," where homeownership becomes a legacy asset rather than an attainable goal (Fast Company)

This prediction is especially concerning given the lack of housing, as mentioned earlier in the blog. With rising interest rates, inflation, and the return of tariff threats on imported materials like lumber, steel, and appliances, developers are facing higher costs and lower confidence in future demand. If builders start pulling back again — as many did in late 2023 and early 2024 — we risk repeating the post-2008 supply gap just as Gen Z hits peak home-buying age.

Despite these challenges, homeownership remains a goal for many. A survey indicates that 72% of Gen Z plan to buy a home within the next six years . However, achieving this aspiration will require addressing systemic issues such as affordability, wage growth, and housing supply. (Rocket Mortgage)

As of Q1 2025, roughly 65% of US households are owner's vs 34.5% renters. However, based on trajectory and predictions, we see the two ratios coming much closer in the future if housing prices don't drop to realistic levels.

 Conclusion

The housing market's trajectory from the 2020 boom to the current state in 2025 highlights the complex interplay of economic policies, demographic shifts, and market psychology. As we look ahead, the potential for a pricing correction and the rise of a renter-dominated society underscore the need for thoughtful policy interventions and innovative solutions to ensure equitable access to homeownership.

What Can Gen Z Do Now? Smart Steps Toward Homeownership

Let’s be real: navigating today’s housing market isn’t easy. With prices still high, interest rates fluctuating, and wages lagging behind, it’s no surprise many Gen Zers are feeling stuck between renting forever or making a risky leap into ownership. But there are practical steps you can take — whether you’re looking to buy now, later, or explore alternative paths.

Here’s what to focus on:

1. Don’t Rush — But Don’t Wait Forever Either

Buying a home just to “get in before it’s too late” can be financially dangerous — especially if you’re buying at the top of the market. On the flip side, waiting forever for a housing crash or the “perfect time” can leave you spinning your wheels.

The best time to buy is when you’re truly ready:

• You’ve built untouchable savings (at least 3–6 months of expenses)

  
  

• You’ve set aside enough for a down payment + moving and repair costs

  
  

• Your total housing expenses (mortgage, taxes, insurance, HOA) are no more than 30–40% of your gross monthly income

  • Ideally, aim for 25–30% to avoid being house poor

2. Embrace Creative Ownership Models

Housing affordability is pushing Gen Z to think outside the white-picket-fence model — and it’s working.

• 22% of Gen Z buyers have already bought property by pooling money with friends (ServiceLink, 2024)

  
  

• 45% of Gen Z mortgage applications now include co-applicants, often family or friends (Realtor.com, 2024)

  
  

That means co-buying is no longer niche — it’s a growing strategy. Other alternative paths include:

• Housing co-ops

• Community land trusts

• Group investment properties

  
  

These options offer a way in without needing to shoulder everything solo.

3. Rethink What and Where You Buy

Homeownership doesn’t have to mean a 4-bed, 3-bath house in the suburbs.

• Smaller properties in up-and-coming neighborhoods can be smarter plays than oversized “forever homes”

  
  

• Condos and townhomes often come with lower entry prices and can be easier to rent out later

  
  

• HOAs, while sometimes annoying, often cover major expenses like heating, building maintenance, or even roofs — especially in cities like Chicago

  
  

If the numbers make sense, you’re not just buying a place to live — you’re investing in an income-generating asset.

 4. Take Advantage of Incentives

Plenty of cities and states are offering real money to attract new homeowners or remote workers:

• Tulsa, Oklahoma and Topeka, Kansas, for example, offer $10,000+ relocation grants

  
  

• Many states offer first-time homebuyer assistance, including down payment grants, reduced mortgage rates, or tax deductions

  
  

• Some lenders also provide closing cost credits or special programs for veterans, teachers, or healthcare workers

  
  

Tip: Look for programs at the local, state, and lender levels — and don’t settle for the first mortgage offer you get.

5. Get Involved: Push for Policy Reform

Let’s talk bigger picture. One of the reasons home prices are so high is because outdated zoning laws and NIMBY (Not In My Backyard) politics restrict new housing supply — especially multi-family or mixed-use buildings.

If Gen Z wants to change the system, we need to:

• Advocate for zoning reform that allows for duplexes, ADUs (accessory dwelling units), and small apartment buildings

  
  

• Support mixed-use development in suburbs and cities alike

  
  

• Show up at town halls and planning meetings to demand more inclusive housing policies

Housing isn’t just a personal issue — it’s a structural one.

6. Learn How to Build Wealth Outside the Norm

Even if you’re not ready to buy, you can start building financial power by:

• Learning about real estate investing (including REITs or crowdfunding platforms)

  
  

• Researching rent-to-own models

  
  

• Exploring house hacking (buying a property and renting part of it out)

  
  

• Understanding how your credit score, debt, and income affect your loan eligibility

  
  

Knowledge compounds just like money does. The more you learn, the more confident and prepared you’ll be when your moment comes.

Final Thought

You don’t have to follow the same script your parents did — and honestly, you can’t. This is a different world. But with smart planning, creative thinking, and collective action, Gen Z can still find a way forward. The future of housing isn’t just about where we live — it’s about how we live, together.