Millennials still make up the majority of demand for mortgages, but the coveted Gen Z market is beginning to materialize.
Adults aged 25 to 41 accounted for 54% of overall home purchase applications this year, the highest share for Millennials on record, according to a CoreLogic analysis of its Loan Application database. Millennials have accounted for the largest share of home purchases among all age demographics since 2016, when they overtook the Gen X market share.
“Millennial demand for houses is likely to remain strong in the coming years since this generation represents the largest number of first-time homebuyers, as well as a substantial number of move-up purchasers,” wrote Arhana Pradhan, CoreLogic principal and economist at the office of the Chief Economist in a press release this week.
Among first-time homebuyer mortgage applications, 72% came from Millennials, while 9% were from Gen Zers, or adults born after 1997. That cohort, whose oldest members are 24 years old, made up just 3% of first-time homebuyer loan applications last year. The young adults gained market share despite a year of increasing mortgage rates and home prices only slightly retreating from record highs.
Still, Gen Z was responsible for just 4% of overall home purchase applications in 2022, trailing Baby Boomers born between 1946 and 1964 and Gen Xers born between 1965 to 1980, CoreLogic found. The Gen Z demographic only surpasses the tiny percentage of the Silent Generation group of adults born before 1946 in mortgage application share.
Experts believe Gen Zers are more amenable to homeownership than Millennials, and mortgage professionals are exploring new marketing strategies to reach them. Gen Zers have also shown more interest in fashionable cities outside of big coastal metropolitan areas and even a willingness to buy homes at auctions.
Meanwhile, Millennials are beginning to corner the repeat homebuyer market, making up 43% of all repeat buyers this past year, eight percentage points higher than Gen Xers, Pradhan wrote. The CoreLogic analysis excluded second-home buyers and investors, who remain a significant factor in the nation’s housing markets.