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By National Mortgage Professional <— Click here for complete article and others

• The first-time buyer pool is shrinking. With only about a quarter of Gen Z adults owning homes, purchase demand is thinner than in prior generations.

• Equities are competing with mortgages for dollars. Gen Z is funneling disposable income into investment apps, making it harder to accumulate down-payment savings.
• Market volatility could reshape demand. A stock downturn could push some Gen Zers back toward the perceived stability of homeownership — or leave them even less financially prepared.
• Lenders must meet Gen Z where they are. Digital engagement, education, and innovative loan products will be critical in converting today’s investors into tomorrow’s homeowners.

For decades, the path to building wealth in America began with a home purchase. But for many members of Generation Z, that dream is on hold — or out of reach entirely. 

The key barrier? Affordability. Faced with mortgage rates to the tune of 6.5% or so and home prices that have more than tripled since 2000, younger buyers are increasingly bypassing the housing market and turning instead to equities and investment apps as their wealth-building vehicle of choice.

This generational pivot isn’t just a cultural curiosity. For mortgage professionals, it signals a long-term shift in demand, first-time buyer dynamics, and how originators will need to position themselves to connect with the next wave of homeowners.

Shift In Mindset

Gen Z’s preference toward investing is dramatic. According to the JPMorgan Chase Institute, the share of 25-year-olds with investment accounts jumped from just 6% in 2015 to 37% as of last year. That represents a sixfold increase in less than a decade, driven by the rise of zero-commission trading, social media financial influencers, and pandemic-era savings that many young adults funneled into the stock market instead of housing.

Media voices with wide reach, such as YouTube financial personalities, have even counseled young adults to hold off on buying until housing prices come down significantly. The message resonates because many Gen Zers have done the math: at today’s interest rates, the monthly mortgage payment on a median-priced home can consume far more than the traditional / target 30% of household income.

The result is a mindset shift. Rather than stretching for a home purchase, many in this young generation are allocating their disposable income to equities, ETFs, and even crypto. 

“For mortgage professionals, it signals a long-term shift in demand, first-time buyer dynamics, and how originators will need to position themselves to connect with the next wave of homeowners.”

They see markets as more accessible, flexible, and — at least in the short term — more rewarding than homeownership. For lenders and brokers, that shift means the traditional first-time buyer pipeline is being rerouted into brokerage apps like Robinhood, Schwab, and Fidelity.

Gen Z Homeownership Barriers

The financial hurdles facing Gen Z homebuyers are steep. According to Redfin, just 26% of Gen Z adults owned homes in 2024, a rate that trails Gen X and Baby Boomers when they were at the same age. The median age of a first-time buyer reached 38 last year, the oldest ever recorded.

Three barriers dominate:

• Affordability: Median home prices hit $412,000 in 2024, compared with $120,000 in 2000. Wage growth simply hasn’t kept up.
   
• Financing costs: With 30-year fixed mortgage rates averaging around 6.6% this summer, the monthly payment burden has locked out many younger buyers.
   
• Student debt and credit standards: A heavier student loan burden means weaker debt-to-income ratios, while stricter underwriting guidelines make approvals harder.

These headwinds are forcing many potential first-time buyers to delay or abandon their homeownership goals. Instead, they rent longer, move in with family, or shift resources toward investing. For the mortgage industry, this represents not just delayed demand — but potentially a smaller buyer pool altogether.

How Much Gen Z Is Really Investing

Opening an account doesn’t necessarily mean building wealth, but data show Gen Z is committing real — if still modest — dollars to investing.

• Retirement accounts: According to Fidelity, the average Gen Z 401(k) balance reached $13,500 at the end of 2024, while the average IRA balance was around $6,700. These are small numbers compared to older generations, but they reflect early participation.
   
• Brokerage portfolios: An Investopedia survey found Gen Z’s median portfolio size around $4,000, with cryptocurrency making up about a quarter of those assets.
   
• Cash reserves: Research from Empower finds that Gen Z tends to keep large amounts of cash on hand — with a median cash balance exceeding $30,000 — while still allocating more than 40% of portfolios to U.S. equities.

Taken together, the data suggest that while Gen Z is investing earlier than previous cohorts, they are also cautious. Their portfolio sizes remain relatively small, and many prefer to keep liquidity on the sidelines. 

For housing professionals, this means two things: the down-payment savings hurdle remains steep, and the financial competition between markets and mortgages is real.