Redfin reports 30% of 25-year olds owned their home in 2022, higher than the 27% rate for Gen Xers when they were the same age

Nearly one-third (30%) of 25-year-olds owned their home in 2022, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s slightly higher than homeownership rates for millennials (28%) and Gen Xers (27%) when they were 25, and slightly lower than the rate for baby boomers (32%) when they were 25.

Some Gen Zers were able to take advantage of record-low mortgage rates in 2020 and 2021 to buy homes, putting the generation on a slightly better homeownership trajectory than their parents. But those who didn’t buy homes during that period may struggle to break into the market now that housing costs have shot up, and the economy is showing signs of slowing.

Gen Zers tracking along with their parents’ homeownership rate is counter to the common narrative that it’s more difficult for today’s 20-somethings to buy homes than in generations past. In fact, Gen Z homeowners spent the same portion of their income on housing in 2021 (the most recent year for which income data is available) as they did three decades earlier.

A 25-year-old’s median monthly mortgage payment was $1,013 in 2021, 16% of their $74,900 median income. That’s compared with a median $904 monthly payment for a 25-year-old in 1990, 16% of their $69,419 median income (adjusted for inflation). It’s worth noting that 25-year-olds buying a home now likely spend a higher portion of their income on monthly payments than those who bought in 2021, as mortgage rates have increased.

Young adults rode the rising tide of low mortgage rates and a strong job market to buy homes during the pandemic

Many Gen Zers took advantage of 3% mortgage rates to become homeowners in 2020 and 2021. The typical mortgage rate for homebuyers under 25 using a conventional loan was 3.3% in 2020 and 3.1% in 2021. They have also benefited from a strong job market and double-digit wage growth. For 16-24 year olds, wages rose 12% from a year earlier in January, roughly double the increase for the overall population. Young adults’ incomes have risen quickly largely thanks to the tight pandemic-era labor market.

“The rising tide lifted Gen Z homebuyers in 2020 and 2021; they were part of the pandemic-driven homebuying frenzy,” said Redfin Chief Economist Daryl Fairweather. “Record-low mortgage rates, remote work providing freedom to move somewhere more affordable and skyrocketing rental costs motivated some Gen Zers to break into the housing market. While the oldest of their generation had just graduated college when the pandemic started and hadn’t started building up their bank accounts, they had some financial advantages. The unemployment rate was near record lows in late 2021 and 2022, with pandemic-related labor shortages in industries that attract young workers like hospitality and retail prompting those employers to boost pay. Government stimulus payments, the pause on student loan repayments and the fact that many young adults lived with family during the lockdowns also helped Gen Zers save money.”

Younger homebuyers need less money than their older counterparts because they tend to buy cheaper homes with smaller down payments. That’s partly because people under 25 may be more flexible about home size and location than an older person who’s more likely to have children and places more value on proximity to certain schools and their office.

In 2022, the typical primary residence purchased by someone under 25 cost $235,000 and came with a $10,000 down payment (assuming a conventional loan). That’s compared to $355,000 ($30,000 down payment) for 25-34 year olds, and $405,000 ($50,000 down payment) for 45-54 year olds.

Gen Zers who don’t yet own homes face several obstacles and may fall behind. Low mortgage rates helped some Gen Zers buy homes with relatively low incomes over the last few years, but many are priced out now that rates are above 6% and home prices remain well above pre-pandemic levels.

Additionally, the Fed’s interest-rate hikes may cause a recession, which could set the generation back financially, and the average Gen Zer has even more student debt than millennials (although higher education may lead to higher-paying jobs). And the Gen Zers who can afford a home may not find one, with a limited supply of homes for sale.

Millennials, unlike Gen Zers, are tracking behind older generations’ homeownership rates

Sixty-two percent of 40-year-olds—some of the oldest millennials—owned their home in 2022. That’s compared with 69% of baby boomers when they were 40 and 64% of Gen Xers when they were 40.

Younger millennials are also behind. Just over two in five (43%) 30-year-olds owned their home in 2022, compared with roughly half of baby boomers (52%) and Gen Xers (49%) when they were 30.

“Millennials have been financially unlucky. Their parents had a more straightforward financial journey,” said Fairweather. “The oldest millennials entered the workforce during the 2001 recession. Then came the 2008 financial crisis, with many millennials in their first post-college job. It limited their earnings, overall wealth and ability to buy a home for many years afterward. Millennials started to gain homebuying momentum just before the pandemic, but they were once again dealt a bad hand with pandemic-related job losses in April 2020.”

Older Americans most likely to own their homes; young Americans least likely

Overall, 26% of adult Gen Zers own their home. That’s compared with 79% of baby boomers, the highest share of any generation, followed by Gen X (71%) and millennials (52%).

Millennials make up the biggest piece of the homebuying pie

Millennials, along with the oldest Gen Zers and youngest Gen Xers, made up the lion’s share of home purchasers last year. People aged 25 to 34 bought one in three (33%) of primary homes that sold in the U.S. last year, the highest share of any age group. They’re followed by 35-44 year olds, who bought 27% of them.

Gen Zers are players in the homebuying game, though their share is small. People under 25 bought just over one in 20 (6%) of homes that sold last year. This home-purchase data includes only homes to be used as a primary residence that were purchased with a mortgage; roughly 30% of homes were bought in cash last year.

Younger people move more often and buy more homes than older generations because their life stages beget moving. Roughly half of homeowners under 35 own their home for less than three years, versus 15% of 35-64 year olds and 7% of homeowners 65 and older.

People in their 20s and 30s are entering the workforce, moving to different parts of the country, settling into their careers and turning from renters into homeowners, events that often require or at least encourage a move. Many of them are also getting married and having children, which often prompts a move to a different neighborhood and/or a bigger house.

Gen Z homebuyers are most prevalent in affordable areas; millennials buy in tech hubs

People under the age of 25 bought roughly 9% of the primary homes that sold in Virginia Beach, VA last year, a bigger share than anywhere else in the country. Next come Cincinnati, OH (8.5%), Detroit, MI (7.9%), St. Louis, MO (7.5%) and Indianapolis, IN (7.1%).

Those places are all relatively affordable, making it easier for young homebuyers to break into the market. In each of those metros, the typical home bought by a Gen Zer sold for $255,000 or less in 2022.

Virginia Beach is home to one of the biggest military bases in the U.S., and nearly half of mortgaged home sales there use VA loans, which are available to service members and require very low or no down payments. The ability to put just a small amount down is advantageous for young buyers who haven’t built up a lot of savings.

The oldest Gen Zers and young millennials are buying big chunks of the housing stock in tech hubs. People aged 25-34 bought 41.4% of the primary homes that sold in Seattle last year, the highest share in the U.S. It’s followed by Philadelphia (40.6%), Pittsburgh (39.8%), San Jose, CA (39.7%) and Austin, TX (39.6%).

To view the full report, including charts and metro-level data, please visit: https://www.redfin.com/news/gen-z-millennial-homeownership-rate-home-purchases

Investors are selling at a loss as elevated mortgage rates curtail homebuyer demand

Roughly one of every seven (13.5%) U.S. homes sold by an investor in March sold for less than the investor bought it for, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage. That’s comparable with February’s 14.5% rate—the highest since 2016. It’s also nearly triple the share of a year earlier and compares with a record low of 2.8% in May. By comparison, 4.8% of overall U.S. homes that sold in March sold at a loss.

This is according to a Redfin analysis of county records and MLS data across 40 of the most populous U.S. metropolitan areas. Redfin defines an investor as any institution or business that purchases residential real estate, including both large companies and mom-and-pop investors.

While most housing investors still reaped gains, those gains have shrunk. The typical investor who sold a home in March sold it for 45.9% more ($145,714) than the price they paid, down from 55.3% ($173,458) a year earlier and a pandemic peak of 67.9% ($199,274) in June 2022. It’s important to note that gains don’t necessarily equal profits. Just because an investor sold a home for $145,000 more than they paid doesn’t mean they’re making money because they may have spent more than that on renovating the property.

“Home flippers aren’t reaping the gains they used to,” said Phoenix Redfin agent Van Welborn. “I recently showed one of my buyers a three-bedroom single-family home in Glendale that was listed by an investor. My client ultimately found another house they liked better, and the investor ended up losing about $20,000. The investor bought the home for $450,000 and sold it for $480,000, but put $50,000 of work into it. The house also sold below the $550,000 list price after sitting on the market for almost four months.”

Investors Are Losing Money as Mortgage Rates Rise, Homebuyer Demand Drops

Investors are making less money selling homes—and losing money in some cases—because the housing market has slowed dramatically in response to rising mortgage rates.

The average 30-year-fixed mortgage rate is 6.39%, down from the 20-year high of 7.08% in the fall, but up from 5.11% a year ago and a record low of 2.65% during the height of the pandemic in January 2021. Higher mortgage payments have eaten into investor profits, and sent the typical homebuyer’s monthly payment up nearly $300 from a year ago, which has slowed homebuying demand and pushed down sale prices. As a result, the share of investor-owned homes selling at a loss has increased. While many investors buy homes in cash, they’re still sensitive to high interest rates because they often take out loans to get that cash.

“You might wonder why investors don’t just wait to sell until the housing market bounces back. Many long-term investors who rent their properties out are doing that, but many flippers—especially those who bought recently—can’t afford to,” said Redfin Senior Economist Sheharyar Bokhari. “Holding onto homes that aren’t producing income can be expensive because the owner is on the hook for property taxes, along with operating costs and monthly mortgage payments in some cases. Many short-term investors are also opting to sell because they know prices may have more room to fall and want to cut their losses.”

Roughly one in five (20.8%) homes sold by flippers in March sold at a loss, higher than the 13.5% share for investors overall. For the purposes of this analysis, Redfin defines a flipper as an investor that bought a home and resold it within nine months.

Investors who rent out their properties are also seeing their returns shrink in some areas. The median U.S. asking rent fell 0.4% year over year in March—the first annual drop in three years—and 13 major metros saw larger declines. Owners of short-term rentals are getting hit as well. The Airbnb market is oversaturated with supply, and authorities are imposing tougher restrictions on hosts, driving some to sell, Redfin agents said.

Overall, investor activity has fallen significantly from the height of the pandemic, when record-low mortgage rates and soaring homebuyer demand drove up investor purchases. Redfin recently reported that investor purchases declined a record 46% year over year in the fourth quarter.

Investors Are Most Likely to Sell at a Loss in Phoenix, Las Vegas

In Phoenix, 30.7% of homes sold by investors in March sold at a loss—the highest share of the 40 metros Redfin analyzed and more than double the national rate. Next came Las Vegas (28%), Jacksonville, FL (20.9%), Sacramento, CA (20.2%) and Charlotte, NC (17.4%).

The markets where investors are most likely to lose money are the places where home purchases—by investors and individual house hunters alike—soared during the pandemic. Many of those markets are also on the list of housing markets that are now cooling fastest. Pandemic boomtowns are seeing home prices and sales fall relatively quickly because housing costs surged to unsustainable levels during the pandemic, pricing out many house hunters, and elevated mortgage rates then added fuel to the fire.

Redfin agents say that small, individual investors are often the ones offloading their properties now, while many large investment companies are waiting on the sidelines for the market to improve.

“Most of the investors I see selling now are mom-and-pop investors,” said Las Vegas Redfin real estate agent Shay Stein. “They’re selling because their long-term tenants are moving out, they want to put their money elsewhere, or they just want to get out because they have heartburn from 2008. The best time to sell would’ve been late 2021 or early 2022, but many of them are thinking that the next best time is now because the economy and home prices could slow further.”

While a lot of large investors are holding onto their properties, iBuyers (instant buyers) are the exception, according to Stein. Many iBuying companies, including RedfinNow, ceased or slowed operations in the last two years and have been offloading inventory. That’s likely part of the reason that some markets where iBuyers had a large presence, including Phoenix, Charlotte and Las Vegas, have seen an uptick in the share of investor-owned homes selling at a loss.

“My colleague recently represented a couple that purchased an iBuyer home for $610,000, substantially below the $760,000 list price and the $708,200 price that the iBuyer paid for the home,” Stein said. “The appraisal also came in at $680,000, so the buyers walked away with $70,000 in equity. The house sat on the market for 166 days before selling.”

Investors are less likely to lose money in affordable areas and select South Florida markets, which have held up relatively well. In Virginia Beach, VA, 1.7% of homes sold by investors in March sold at a loss. It was followed by West Palm Beach, FL (2.4%), Miami (2.5%), Fort Lauderdale, FL (2.5%) and Warren, MI (2.6%). Affordable markets have seen housing demand fare relatively well because prices didn’t overheat as much during the pandemic, and the rise in mortgage rates doesn’t make as big of a dollar difference in monthly housing payments as it does in expensive areas.

Investors Own 10% of Homes for Sale, Higher Than Pre-Pandemic Levels

Investors owned 10.1% of new listings on the market as of December, the most recent month for which listing data is available. That’s down from a peak of 12.4% a year earlier, but higher than pre-pandemic levels.

To view the full report, including additional analysis, charts and metro-level data, please visit: https://www.redfin.com/news/investor-homes-sold-at-a-loss

Existing-home sales edged lower in March, according to the National Association of Realtors^®. Month-over-month sales declined in three out of four major U.S. regions, while sales in the Northeast remained steady. All regions posted year-over-year decreases.

Total existing-home sales,^[i] https://www.nar.realtor/existing-home-sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – fell 2.4% from February to a seasonally adjusted annual rate of 4.44 million in March. Year-over-year, sales waned 22.0% (down from 5.69 million in March 2022).

“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said NAR Chief Economist Lawrence Yun. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”

Total housing inventory^[ii] registered at the end of March was 980,000 units, up 1.0% from February and 5.4% from one year ago (930,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from February but up from 2.0 months in March 2022.

“Home prices continue to rise in regions where jobs are being added and housing is relatively affordable,” Yun noted. “However, the more expensive areas of the country are adjusting to lower prices.”

The median existing-home price^[iii] for all housing types in March was $375,700, a decline of 0.9% from March 2022 ($379,300). Price climbed slightly in three regions but dropped in the West.

Properties typically remained on the market for 29 days in March, down from 34 days in February but up from 17 days in March 2022. Sixty-five percent of homes sold in March were on the market for less than a month.

First-time buyers were responsible for 28% of sales in March, up from 27% in February but down from 30% in March 2022. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 2022^[iv] – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.

All-cash sales accounted for 27% of transactions in March, down from 28% in February and one year ago.

Individual investors or second-home buyers, who make up many cash sales, purchased 17% of homes in March, down from 18% in February and the previous year.

Distressed sales^[v] – foreclosures and short sales – represented 1% of sales in March, nearly identical to last month and one year ago.

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.27% as of April 13. That’s down from 6.28% from the previous week but up from 5% one year ago.

“With overall consumer price inflation calming and rents expected to decelerate from robust apartment construction, the Federal Reserve’s monetary policy will surely shift from tightening to neutral to possibly loosening over the next 12 months,” Yun added. “Therefore, home sales will steadily rebound despite several months of fluctuations.”

Single-family and Condo/Co-op Sales

Single-family home sales faded to a seasonally adjusted annual rate of 3.99 million in March, down 2.7% from 4.10 million in February and 21.1% from one year ago. The median existing single-family home price was $380,000 in March, down 1.4% from March 2022.

Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 450,000 units in March, identical to February but down 28.6% from the previous year. The median existing condo price was $337,300 in March, an annual increase of 2.1%.

“As documented in NAR’s recent report about housing wealth gains by homeowners over the last decade, homeownership offers a road to financial security and wealth development,” said NAR President Kenny Parcell, a Realtor^® from Spanish Fork, Utah, and broker-owner of Equity Real Estate Utah. “Rely on a Realtor^® to provide sound advice while purchasing your first home or next home.”

Regional Breakdown

Existing-home sales in the Northeast were unchanged from February at an annual rate of 520,000 in March, but down 21.2% from March 2022. The median price in the Northeast was $395,400, up 1.0% from one year ago.

In the Midwest, existing-home sales retracted 5.5% from one month ago to an annual rate of 1.03 million in March, falling 17.6% from the previous year. The median price in the Midwest was $273,400, up 1.7% from March 2022.

Existing-home sales in the South receded 1.0% in March from February to an annual rate of 2.07 million, a 20.4% decrease from the prior year. The median price in the South was $347,600, an increase of 0.3% from one year ago.

In the West, existing-home sales declined 3.5% from the previous month to an annual rate of 820,000 in March, down 30.5% from the prior year. The median price in the West was $565,400, down 7.5% from March 2022.

About NAR

The National Association of Realtors^® is America’s largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor^® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors^® and subscribes to its strict Code of Ethics.

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For local information, please contact the local association of Realtors^® for data from local multiple listing services (MLS). Local MLS data is the most accurate source of sales and price information in specific areas, although there may be differences in reporting methodology.

NOTE: NAR’s Pending Home Sales Index for March is scheduled for release on April 27, and Existing-Home Sales for April will be released on May 18. Release times are 10 a.m. Eastern.

Information about NAR is available at nar.realtor. This and other news releases are posted in the newsroom at nar.realtor/newsroom. Statistical data in this release, as well as other tables and surveys, are posted in the “Research and Statistics” tab.

^[i] Existing-home sales, which include single-family, townhomes, condominiums and co-ops, are based on transaction closings from Multiple Listing Services. Changes in sales trends outside of MLSs are not captured in the monthly series. NAR benchmarks home sales periodically using other sources to assess overall home sales trends, including sales not reported by MLSs.

Existing-home sales, based on closings, differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which account for more than 90% of total home sales, are based on a much larger data sample – about 40% of multiple listing service data each month – and typically are not subject to large prior-month revisions.

              The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns. However, seasonal factors cannot compensate for abnormal weather patterns.

              Single-family data collection began monthly in 1968, while condo data collection began quarterly in 1981; the series were combined in 1999 when monthly collection of condo data began. Prior to this period, single-family homes accounted for more than nine out of 10 purchases. Historic comparisons for total home sales prior to 1999 are based on monthly single-family sales, combined with the corresponding quarterly sales rate for condos.

^[ii] Total inventory and month’s supply data are available back through 1999, while single-family inventory and month’s supply are available back to 1982 (prior to 1999, single-family sales accounted for more than 90% of transactions and condos were measured only on a quarterly basis).

^[iii] The median price is where half sold for more and half sold for less; medians are more typical of market conditions than average prices, which are skewed higher by a relatively small share of upper-end transactions. The only valid comparisons for median prices are with the same period a year earlier due to seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns. Changes in the composition of sales can distort median price data. Year-ago median and mean prices sometimes are revised in an automated process if additional data is received.

The national median condo/co-op price often is higher than the median single-family home price because condos are concentrated in higher-cost housing markets. However, in a given area, single-family homes typically sell for more than condos as seen in NAR’s quarterly metro area price reports.

^[iv] Survey results represent owner-occupants and differ from separately reported monthly findings from NAR’s Realtors^® Confidence Index, which include all types of buyers. The annual study only represents primary residence purchases, and does not include investor and vacation home buyers. Results include both new and existing homes.

^[v] Distressed sales (foreclosures and short sales), days on market, first-time buyers, all-cash transactions and investors are from a monthly survey for the NAR’s Realtors^® Confidence Index, posted at nar.realtor.