U.S. Rep. Maxwell Frost (D-Fla.), the first Generation Z member of Congress, recently struggled to find an affordable place to live in Washington, D.C. Many other young adult Gen Zers are confronted with the same problem. This, however, has not dampened their desire to become homeowners.
A few fast facts on Gen Z:
- The exact age varies by source, but Zonda considers those born between 2000 and 2020 to be Gen Z (ranging from 3 to 23 years old today). For the purpose of this article, we are talking about the older Gen Zs that are in or approaching their home buying years.
- Gen Zers represented 9% of home buyers in 2022 per CoreLogic, up from less than 5% in 2020.
- A Rocket Mortgage survey of Gen Zers found that nearly 70% are saving money, and, of those savers, roughly 56% are intentionally saving for their first home.
When looking at this cohort, the majority want to own a home one day, just like the generations before them. A Realtor.com study, for example, found that 72% of Gen Z respondents plan to own a home with their main motivations behind the purchase being space and providing for their family, whether moving in with a partner or planning for future children.
Despite the strong interest in homeownership, members of Gen Z see the same challenges as millennials. Bankrate.com found that affordability is the biggest impediment to homeownership, which matches Zonda’s data that shows that aside from “I’m waiting for prices to come down,” the majority of millennials cite affordability challenges among the top reasons that they rent.
With the background set, the economics team at Zonda gathered data on the median age in select metropolitan areas to see where there’s a relatively large concentration of Gen Zers.
As seen in the table below, Salt Lake City had the lowest median age at 33.6 years. Houston and Colorado Springs, Colorado, rounded out the youngest three markets with a median age of 35.3 and 35.4, respectively. For context, the median age nationally is 38.8.
We noticed some trends among the top markets:
1. On a different level. Salt Lake City’s median age is five years younger than the national average. This matches data from the Census Bureau’s American Community Survey that shows that Utah has the highest number of children per capita and the highest number of children per family in the country. Part of this can be attributed to the larger-than-average concentration of Latter-day Saints in the market. Pew Research found that those of the faith have more children than other groups, which has helped lower the area’s median age.
“There are three drivers behind the low median age in Salt Lake City,” explains Dejan Eskic, a senior research fellow at the Kem C. Gardner Policy Institute. “First, those in Utah tend to get married earlier and have kids earlier than most places in the U.S. Second, Salt Lake City is a college town that offers employment in some major financial institutions, both of which pull down the median age substantially. Third, while there is some out-migration, those relocating in tend to be younger and in greater volume than the folks that move out.”
2. Big city, young city. Houston is the second largest new-home production market in the country behind Dallas, per Zonda data. Houston is also the second youngest of the markets highlighted here. Houston’s younger-than-average population is partly driven by the large share of college students. A Newsweek ranking has Houston as No. 10 in the country for the most college kids. Further, population diversity has helped keep the median age down. Data from the Greater Houston Partnership found that one-fifth of the white population is below 18 compared with one-third for the Hispanic population and one-fourth for the Black population.
According to Dustin Moudy, Zonda’s senior vice president of Advisory, “The high prevalence of educated Gen Z aged residents in Houston plus the substantial number of high-income, or future high-income households, progressing toward homeownership bodes well for housing demand and new-home builders in the years ahead.”
3. Strong tech presence. Many of the youngest markets like Austin, Texas; Columbus, Ohio; and Seattle are magnets for tech jobs and generally attract younger residents. In fact, a Deloitte report found that 51% of Gen Zers surveyed rated technology as the top industry to which they are drawn.
“While the existence of tech jobs is attractive to many of this generation, there are some lingering near-term employment and migration concerns as the sector is among the current slowest in the wider economy,” says Tim Sullivan, Zonda Advisory’s senior managing principal. “We still think these markets and the tech sector will do well in attracting Gen Zers in the longer term, but buckle up for some uncertainty over the next couple of years.”
Millennials represent the demographic cohort the housing industry is most enthusiastic about today. As Gen Zers age, however, they will become an increasingly important part of the housing landscape, and it is worth researching and understanding this generation now.