Realtor.com; Canva
Financially-savvy Generation Zers are successfully becoming homeowners—and they’re moving to more affordable metros to grab a bargain.
Late last month, Katie Hoehle, 24, and Jacob Aldrich, 23, closed on their first home after viewing more than a half-dozen houses. The engaged couple finally found what they were looking for in a newly renovated, two-bedroom, one-bedroom duplex with a one-car garage in Elk River, MN. The home was priced at $209,000, and they got it for $212,000.
They made homeownership happen after Aldrich sold a vehicle and Hoehle was promoted from an intern to a full-time position with a “big pay raise,” she says. They also received down payment assistance from the state.
“I thought this was The One,” says Hoehle, who works for a cybersecurity company. Her fiancé is a machine operator at a surgical company. They plan to get married in May and purchased the home to be the start of their family. “It’s got a nice little backyard. I’m planning my little garden. … I love that we have a brand-new kitchen.”
Hoehle and Aldrich are among a new generation of homebuyers. About 6.2% of all folks purchasing primary homes were under 25 in 2022, according to the most recent Home Mortgage Disclosure Act data available.
That’s because members of Generation Z, known for being thrifty and financially responsible, are contending with high home prices, rising mortgage rates, and a shortage of homes on the market. They’re also competing against investors and homeowners who can tap their equity to fund their next purchases.
Yet, there are parts of the country where Gen Z members are successfully becoming homeowners, like Hoehle and Aldrich.
Realtor.com® identified these metropolitan areas with the largest percentage of Gen Z buyers who closed on homes in 2022, using the most recent government data available. All of the metros on our list boasted home prices well below the national median list price of $424,900 in March, according to the most recent Realtor.com data. Most are at least $100,000 less than the national list price.
Many are also near military bases. Buyers in these areas often use U.S. Department of Veterans Affairs loans, which don’t require down payments and usually offer lower mortgage rates.
Remote work schedules might also be helping them to become homeowners.
“Gen Zers with college degrees are working everything from fully remote to hybrid schedules,” says Mark Beal, a public relations professor at Rutgers University who wrote four books on Gen Z. “They have greater flexibility in where they can purchase homes. If they’re 100% remote, they can live anywhere in this country.”
This generation also prioritizes finding ways to stretch their money.
“Gen Z does a lot of research before making any significant purchase,” says Beal. “In homebuying, they’re looking to get great value.”
To come up with our findings, we looked at the most recent Home Mortgage Disclosure Act data available, which is from 2022. We then identified the metropolitan areas that had the highest percentage of buyers aged 25 and under.
We did not include loans that were denied or withdrawn, home equity lines of credit, or loans for refinances, home equity, home renovations, vacation homes, and investment properties.
Gen Z is buying homes in cheaper parts of the country
One of the biggest barriers to homeownership for Gen Z is the lack of affordability. Home prices have soared over the past few years, and rising mortgage rates have made buying a home extremely difficult for many young buyers. Add in inflation, the resumption of student loan payments, higher rents, and competition from investors, and younger, first-time buyers have been at a disadvantage.
However, they have been more successful in climbing onto the homeownership ladder in places with cheaper prices.
Hoehle and her fiancé were able to do it in Elk River, MN, about 45 minutes from St. Cloud, MN (No. 10 on our list). However, their $212,000 home cost half of the national median price of $424,900.
In Cumberland, MD, No. 5 on our list, homes were listed at a median of just $158,000 in March. In St. Joseph, MO, No. 7, the median price was $169,000. Lima, OH, No. 3, and Watertown, NY, No. 6, both boasted prices below $250,000, at $212,000 and $235,000 respectively. Hinesville, GA, No. 8, had a median of $282,000; Waterloo, IA, No. 4, had a median of $280,450; and Elkhart, IN, No. 2, had a median of $295,000.
“Elkhart’s housing is a little more affordable,” says Aaron Cowham, a real estate broker at Howard Hanna based near Elkhart. The area is known for its recreational vehicle (RV) manufacturing industry.
In St. Cloud, the priciest place on our list with a median list price of $350,000 in March, buyers are often seeking three-bedroom, two-bathroom homes with two-car garages built in the 1950s and 1970s, says Janel Morgan of Re/Max Results in St. Cloud.
Many of her younger buyers are newly married and expecting their first child.
“First-time homebuyers are my favorite. They’re so grateful when you give them the keys to their first home,” says Morgan.
Many Gen Z hot spots are in military communities
Many of the metros on our list have strong military connections.
Jacksonville, NC, the nation’s top Gen Z market, is home to Marine Corps Base Camp Lejeune. There are about 120,000 active-duty, dependent, retiree, and civilian employees on the base and surrounding community, according to the Marines site.
“All of them are using VA loans,” says Jacksonville real estate broker Ronda Scott, of Re/Max Elite Realty Group. That means her younger clients don’t need to come up with down payments and often receive lower mortgage rates. “Some of [them] get married very young, and there’s not a lot of base housing or there’s a long wait. So they go ahead and buy a house.”
They typically look for three-bedroom, two-bathroom homes spanning anywhere from 1,100 to 1,500 square feet on smaller lots priced below $275,000, she says. Typically, they own their homes for three or four years and then either sell them or rent them out.
“I’ve sold new construction. I’ve sold townhouses. I’ve sold mobile homes. It varies,” Scott says.
Other military towns include Watertown, NY, No. 6, which is right near Fort Drum, an Army military reservation with about 16,000 residents, according to 2020 U.S. Census Bureau data. St. Joseph, MO, No. 7, is where Rosecrans Air National Guard Base is located. There is also Hinesville, GA, No. 8, where Fort Stewart is located. It’s an Army base of about 9,000 residents, according to 2020 U.S. Census Bureau data.
Lima, OH, No. 3, in Northwestern Ohio, is home to the Joint Systems Manufacturing Center, a government-owned and contractor-operated tank plant.
1. Jacksonville, NC
This three-bedroom, two-bathroom house is on the market for $265,000.
Realtor.com
Percentage of Gen Z buyers: 17.91%
Median home list price in March: $330,000
2. Elkhart, IN
Percentage of Gen Z buyers: 17.86%
Median home list price: $295,000
3. Lima, OH
Buyers can snag this brick three-bedroom, one-bathroom home for $169,900.
Realtor.com
Percentage of Gen Z buyers: 17.44%
Median home list price: $212,500
4. Waterloo, IA
Percentage of Gen Z buyers: 17.14%
Median home list price: $280,450
5. Cumberland, MD
This three-bedroom Cape Cod in Cumberland, MD, has been recently renovated.
Realtor.com
Percentage of Gen Z buyers: 15.2%
Median home list price: $158,000
6. Watertown, NY
Percentage of Gen Z buyers: 15.14%
Median home list price: $235,000
7. St. Joseph, MO
This four-bedroom, 3.5-bathroom home has been recently remodeled and is for sale for $119,900.
Realtor.com
Percentage of Gen Z buyers: 14.96%
Median home list price: $169,900
8. Hinesville, GA
Percentage of Gen Z buyers: 14.86%
Median home list price: $282,000
9. Dubuque, IA
This three-bedroom, two-bathroom home is for sale for $251,730 in Dubuque, IA.
Realtor.com
Percentage of Gen Z buyers: 14.78%
Median home list price: $308,750
10. St. Cloud, MN
Percentage of Gen Z buyers: 14.62%
Median home list price: $350,000
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