Buying a home is the American dream for many, but the road to get there can be challenging, particularly for younger generations such as millennials and Generation Z. Amid low inventory and high interest rates, both groups have had to find different ways to achieve homeownership compared to other generations. Here are some of the ways these two cohorts are buying homes.

Down Payments
One of the largest hurdles to buying a home is the down payment. Millennials and Gen-Z are feeling this the most with many unable to save up enough money for a down payment. According to a recent survey by Redfin, besides homes being too expensive, 34% say that saving  for a down payment is their biggest barrier to buying a home. While most are using their savings towards a down payment, many are looking at other options with 39% of Gen-Z and millennials choosing to work a second job to afford their down payments. Family has also been a key source of funding, with 36% of both generations expecting cash gifts for down payments on their homes.

Solo and Co-Buying
Across all generations, married couples have made up the majority of home buyers, but with millennials and Gen-Zer’s there has been a shift to a less traditional way of home buying. The number of solo buyers has been on the rise among younger generations with 42% of millennials opting to purchase a home alone, according to a survey by Bankrate. This generation is also more likely than that of their parents and grandparents to buy a home with a friend, with 10% of millennials doing so versus 3% of Gen-Xers and 1% of Baby Boomers. Although they are just entering the market, Gen-Z is also choosing to buy homes solo versus waiting for a partner. A report on generational trends by NAR found that 51% of Gen-Z buyers were single with 31% of them being female buyers. Gen-Zers were also willing to buy a home with someone who was not their partner with 59% considering it as an option. Buying alone or with a non-romantic partner shows that even with affordability issues, Gen-Z and millennials are willing to use alternative methods to become homeowners.

Millennial and Gen-Z Differences
Both generations share similar tactics when it comes to home buying, but it is important to keep in mind their differences as well. Millennials have become the largest home-buying group, but they waited longer to buy homes compared to other generations with the median home-buying age at 35 years old. Gen-Z, on the other hand, have bought homes earlier, with those who were 25 years old having higher homeownership rates than millennials and Gen-Xers at the same age. Home size has become an important factor to millennials who are further along in their careers compared to the younger Gen-Zers, and have larger incomes and are able to afford bigger homes. As the generation with the lowest income, many of whom just graduated college, Gen-Z buyers are looking to buy smaller affordable homes that have the potential to be turned into investment properties.

For millennials and Gen-Zers, finding different ways to buy a home has been vital in today’s market of high home prices and rates. They may need more assistance getting there or have to go it alone, but homeownership remains the ultimate goal.

For more information on housing, demographic, and economic trends in Virginia, be sure to check out Virginia REALTORS^® other Economic Insights blogs.