Generation Z is moving to homeownership faster than other generations, even though they have faced many obstacles (such as the COVID-19 pandemic, rising inflation, and a turbulent economy). A recent study from Redfin found that 30% of 25-year-olds own their own home in 2022 — more than Generation X (27%) and Millennials (28%) did when they were that age.
However, this high home ownership rate among Gen Z is location dependent. Data from the U.S. Census Bureau shows that nearly one in eight (16.7%) Gen Z homeowners (all adults under the age of 25) own their home. But only nine of the 70 largest cities in the U.S. surpass that rate.Table of Contents
With the growing trend of Generation Z moving to larger cities , the Today’s Homeowner research team took a closer look at where home ownership is most attainable for this generation. Using localized statistics from the Census Bureau, we created an Ownership Score on home ownership attainment for Generation Z for the 70 largest cities in the US. Check out our findings below and review our Methodology section for more details on the data.
key findings
More than one in five Generation Z people own a home in three large U.S. cities: Stockton, California (22.7%), Albuquerque, New Mexico (21.7%) and Phoenix, Arizona (21.0%).
Two cities in Texas and Oklahoma ranked in our top 10 cities for Gen Z home ownership.
No cities in the Northeast or West made the top 10. The highest-ranking Northeastern city is Pittsburgh, Pennsylvania (No. 23), and the highest-ranking Western city is Mesa, Arizona (No. 11).
The Pacific Northwest region lags behind. Seattle, Washington; Portland, Oregon; and Oakland, California, all rank among the five worst cities for Gen Z home ownership.
The most (and least) attainable cities for home ownership for Generation Z
The Today’s Homeowner research team analyzed 70 of America’s largest cities to find out which cities are most and least accessible to Gen Z homeowners. We compared cities based on four factors that relate to housing costs and incomes for Gen Z.
Many of the cities where home ownership is most attainable are in the Midwest and South. As mentioned earlier, of the top 10 cities, there are two Texas and two Oklahoma cities. To see the geographic distribution of the best cities for Gen Z home ownership, check out the map below, which shows the top 25 cities.
However, home ownership is lower among Gen Z in some cities. The table below shows the 10 cities where home ownership is least likely among Gen Z, according to our analysis.
Home ownership is also difficult for Generation Z to achieve in several Pacific Northwest cities, including Seattle, Washington at number one and Portland, Oregon at number three. Additionally, five of the bottom 10 cities are in California.
Factors that make a city favorable for Gen Z home buying
Today’s Homeowner ranked the best and worst cities for Gen Z to buy a home based on four factors: the rate of Gen Z homebuyers, the percentage of Gen Z renters who are cost burdened, the down payment-to-income ratio, and the price-to-rent ratio.
Below we discuss the best and worst performing cities for each factor and each metric.
The Generation Z homeownership rate is the number of Generation Z homeowners relative to the number of Generation Z households. Two cities in Northern California have the highest and lowest Generation Z homeownership rates. Stockton has the highest rate, while Oakland (near San Francisco) has the lowest rate, even though these two cities are less than 80 miles apart.
The Department of Housing and Urban Development (HUD) defines housing cost-burdened as paying more than 30% of pre-tax income on housing costs. Most Generation Z renters are housing cost-burdened. Even in the best-performing city—Orlando, Florida—about 45% of Generation Z renters are housing cost-burdened.
A higher down payment-to-income ratio indicates that homeowners must spend more on their down payment relative to their income. In four cities (Seattle, Washington, and three in California), individuals must pay four times more than their income to afford a 20% down payment on a median-priced home.
A price-to-rent ratio of 21 or higher indicates a more favorable market for renters. In San Francisco, California, the price-to-rent ratio is over 50. In contrast, the Midwestern cities of Detroit, Michigan, and Cleveland, Ohio, show a more favorable environment for homeowners, with price-to-rent ratios of 6.2 and 8.7, respectively.
Buying Tips for Young Prospective Homeowners
Young prospective homeowners may want to consider a number of criteria outside of our analysis. These may include factors such as quality of life, the job market, and home value appreciation.
Factors Related to Quality of Life
Wichita, Kansas is the perfect place to buy a home for Generation Z. But if your favorite activity is surfing, you probably don’t want to buy a home there.
“When selecting a property, you should identify the amenities and lifestyle that matter most to you,” said Michele David , longtime real estate agent and founder of Beach Life Premier Team. “Consider the availability of shopping centers, recreational activities, restaurants and community services in the area.”
job market
You’ll probably want to choose a home in a city where you can advance your career. According to a recent study by MoneyGeek , Provo, Utah; Austin, Texas; and Ogden, Utah, are the best cities for Gen Z job seekers.
The type of career you want to pursue can also influence your home-buying decision. For example, Kansas City, Missouri, and Indianapolis, Indiana — the third and fourth most attainable cities for Gen Z homeownership — are hot-spot cities for ecommerce jobs .
A hot job market will attract more people to your city, increasing the value of your home, which brings us to our next point:
home value appreciation
If you choose to buy a home in a less desirable area, you will be able to purchase a much larger home, but your home is less likely to appreciate in value in this case. Buying a small or medium-sized home in an “up and coming” neighborhood is a very good financial investment. Especially if you plan to sell it as a starter home. By maintaining home repairs through a home warranty plan , your investment can pay off.
Methodology
Today’s Homeowner compared the 70 largest U.S. cities across four metrics to rank the most and least accessible cities for Generation Z. We explain these four metrics and their sources below:
- Generation Z home ownership rate. This is the number of Generation Z homeowners divided by the total number of Generation Z households.
- Percentage of Generation Z renters who are housing cost burdened. This is the percentage of Generation Z renters who spend 30% or more of their pre-tax income on rent.
- Down payment-to-income ratio. This is the 20% down payment on a median-priced home for Gen Z individuals divided by the median household income.
- Price-to-rent ratio. This is the median home price divided by the average annual rent. A ratio of 15 or less means a more favorable market for buyers, while a ratio of 21 or more is more favorable for renters.
Data for all metrics comes from the Census Bureau’s 2021 1-Year American Community Survey .
We calculated the average ranking using the four metrics above and weighted them all equally. The most attainable city got 100 points, while the least attainable city got 0 points.
Questions about our study? Please contact media@todayshomeowner.org .
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