Redfin Reports Gen Zers and Young Millennials Took Out 40% of U.S. Mortgages in 2023
Another 27% of mortgages went to buyers aged 35-44. Young people take out the majority of mortgages because they’re of prime homebuying age, gaining financial stability and growing families. Plus, they’re less likely than older people to pay cash.
This is according to Redfin’s analysis of Home Mortgage Disclosure Act (HMDA) data covering purchases of primary homes. It does not cover purchases of investment properties or second homes.
The breakdown of homebuyers by age has remained stable over the last five years, with younger Americans as the most common mortgage borrowers. The likelihood of taking out a mortgage declines as people get older.
There are several reasons why people under 45 are taking out most mortgages:
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Gen Zers and millennials are aging into homeownership; the median age of first-time
U.S. homebuyers is 35. People tend to be in their late 20s or 30s when they buy their first home because that’s when homeownership becomes financially feasible and desirable: They’ve had time to save for down payments and qualify for mortgages, and they may be growing their families. - Many people view real estate as a safer long-term place to park their money than the stock market or other traditional investments.
- Younger buyers are likely to take out loans rather than pay for homes in cash because they haven’t had much time to amass wealth and/or build equity from the sale of a previous home. Older buyers are more likely to pay in cash.
“First-time buyers aren’t as spooked by high rates as people who are trying to move up to a bigger or better home,” said
Although Gen Zers and millennials were most likely to buy homes last year, they still have lower overall homeownership rates than older Americans, which stands to reason because they haven’t had as much time to buy homes. Just over one-quarter (26%) of adult Gen Zers owned their home in 2023, and 55% of millennials owned theirs. That’s compared to a homeownership rate of 72% for Gen Xers, and 79% for baby boomers.
Gen Zers are catching up to older generations, though: 19-25 year olds have a higher homeownership rate than millennials and Gen Xers when they were the same age.
Some Gen Zers, millennials get financial help from family
Some young homebuyers got financial help from their parents or other older family members to fund their purchases: 3.3% of homebuyers under 35 had a co-borrower over the age of 55 on their mortgage loan in 2023; for buyers aged 35-44, it was 2.8%.
The share of young buyers getting financial help from their parents is much higher when taking into account cash gifts. More than one-third of Gen Zers and millennials who plan to buy a home soon expect to receive a cash gift from family to help fund their down payment, according to a Redfin-commissioned survey fielded in
Buyers under 35 take out nearly half of all mortgages in some
Gen Z and young millennial homebuyers took up the biggest piece of the mortgage pie in relatively affordable
On the flip side, buyers under 35 took up the smallest share of the mortgage pie in popular
Buyers aged 35-44 take up biggest piece of mortgage pie in
The story is different for older millennials, who took out the biggest share of mortgages in the
Buyers aged 35-44 took out the smallest share of mortgages in
To view the full report, including charts and metro-level data, please visit: https://www.redfin.com/news/gen-z-millennial-mortgages-2023
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Source: Redfin