Keep Buying Avocado Toast, Millennials: A New Study Suggests More Gen Zers Will Be Homeowners by 2035

published Jan 11, 2020
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Credit: Joe Lingeman/Apartment Therapy

Even though the whole “millennials will never own homes” thing has become a sort of joke—often told through clenched jaws as an entire generation recognizes its fate— there’s no denying that it’s painfully true. But it turns out that Gen Z may not have to face the same reality. According to a new report from Zillow and Pulsenomics, experts expect that more Gen Zers will own homes than millennials by 2035.

The reason why is pretty simple: millennials have had it tough.

“In 2020, the oldest millennials will begin turning 40, capping a turbulent decade that presented any number of home buying difficulties for them at the same time as they aged into their prime home buying years and severely denting the homeownership rate among 35-to-44-year-olds,” the report reads.  

Experts lay it out like this: First, millennials were faced with graduating into a recession—with enormous amounts of student debt to boot. Then, as home values plummeted, they couldn’t turn to their families for down payment assistance, since their parents’ home equity had lowered. Home values shot back up in 2017 and 2018, but by this point, millennials were priced out of buying. Would-be first-time buyers couldn’t afford a down payment, so they continued to rent. The end result? Homeownership rates for 34-to-44 year-olds dropped from 66 to 60 percent. 

Now, as Gen Zers approach the home-buying age, they will likely find themselves unfettered by the hardships that millennials faced. 

“Millennials have unusually low homeownership rates for their age group,” explains Jeff Zucker, an economist with Zillow. “Economists predicting higher homeownership rates for Gen Z are really just predicting things return to normal for the next generation.”

What that means is, by 2035, experts think student loans won’t be as big of a burden for Gen Z, the supply of available homes will be larger, and the appeal of living and working in an expensive area won’t be as strong as it is right now. That all adds up to increased rates of homeownership.

Some of the economists Zillow surveyed, however, aren’t convinced of this. About 31 percent of experts—what Zillow refers to as “pessimists”—speculated student loans will be even greater for Gen Z, and that fewer people will prefer owning over renting.

“We’re in the eighth year of the supposed housing recovery, but persistent uncertainty about the relative appeal and affordability of homeownership, future housing policies and supply trends leaves the experts far from a consensus,” explains Terry Loebs, founder of Pulsenomics. 

The “optimist” economists look at today’s low unemployment rates and rising wages as a sign that Gen Z will have a confidence boost in their financial prospects. Mortgage lending is also back at a level where qualified buyers aren’t being turned away, Zucker says. 

“The future looks bright for Gen Z, but the big outstanding question is whether high student debt and high home prices that have tripped up millennials get even worse for Gen Z,” Zucker says. “Most of the experts in our survey don’t seem to think those headwinds will be bad enough to outweigh the advantages Gen Z holds over millennials at the same age.”

Go forth and buy homes, Gen Z.