Is Gen Z Getting Priced Out of the Housing Market? Two New Reports Suggest Yes

Data released the same day from two different sources shows homebuying woes for the generation.

The youngest generation in the workforce is facing major challenges in buying a starter home.

LendingTree analyzed more than 130,000 mortgage purchase inquiries and found Gen Z buyers plan to put down a median of $41,250 – 25% below the overall median of $55,000, and the smallest of any generation. Millennials and baby boomers plan $65,000, and Gen X plans $56,250.

A separate Realtor.com analysis found the typical starter home has climbed from $256,000 pre-pandemic to $344,000 today.

“Younger buyers aren’t necessarily putting less down because they want to,” says Matt Schulz, LendingTree’s chief consumer finance analyst. “Many are balancing high home prices, elevated rates and years of inflation that have made it harder to build savings.”

According to Realtor.com, actually getting approved for that $344,000 starter home now takes an income of about $78,000 a year. Before the pandemic, it took just $43,000. Median income, meanwhile, has only grown about 28% in that same time, according to the same analysis.

So saving harder isn’t the whole answer. What lenders expect you to earn has also gone up. Here’s where Gen Z buyers can actually make progress.

You don’t always need 20% down

A lot of people assume you have to save up 20% of a home’s price before you can buy. That’s not true.

Fannie Mae’s HomeReady program allows a down payment as low as 3% for eligible buyers, and HUD says an FHA loan can get you into a home with as little as 3.5% down.

The tradeoff is you’ll likely pay a monthly insurance fee until you’ve built up more equity. FHA loans require it, no matter your down payment size, while conventional loans like HomeReady only require it if you put down less than 20%.

Check what income you actually need

A lender cares about your income relative to the home price, and that bar has moved faster than home prices themselves. Before setting a savings goal, find out what income you’d need to qualify at your target price. It’s a different number than your down payment goal, and it’s worth knowing early.

Look at where the inventory is actually improving

Realtor.com found the South – especially Texas, Florida, and the Carolinas – has added roughly 170,000 more affordable listings since 2022. The Northeast has gone the other way, with prices still climbing and little new supply. Moving isn’t the right call for everyone. But if you have flexibility, it’s not an even playing field out there.

Automate the savings you do have

Consistency beats amount. An automatic transfer of $50 or $100 a paycheck into a dedicated account adds up faster than it feels like it will, and it takes the decision out of your hands every month.

Get your credit in shape before you shop

Your credit score can move your interest rate enough to change your monthly payment by hundreds of dollars. Pull your free reports at AnnualCreditReport.com and clean up what you can before you start touring homes, not after.

Gen Z isn’t behind because of bad habits. The finish line moved. A realistic number, a clear sense of what you need to qualify, and a savings habit that runs on autopilot can still get you there – a financial coach can help you build a plan around your specific numbers.