The 10 most popular markets for Gen Z home buyers

May 23, 2022 11:00 AM

Gen Zer homebuyers are beginning to make a dent in the share of mortgage offers made in some of the nation’s trendiest metropolitan areas.

The young adults are more eager than their millennial predecessors to buy homes and are bringing with them credit scores and savings that stack up well with older competing homebuyers, experts said. Of people born between 1997 and 2012, Gen Zers aged 18 to 24 accounted for approximately 10% of homebuyers across the nation’s 50 largest metros last year, according to LendingTree.

Mortgage and real estate professionals praised the next generation’s financial habits, suggesting Gen Zers want to capitalize on rising home values.

"These guys and gals are in the mid-700s credit-score wise. They really did their homework," said Andy Shelby, a senior loan officer and assistant branch manager at Broker House Lending in Louisville, Kentucky. "They don't teach you that stuff in school. I don't know how they've prepared themselves for homeownership."

LendingTree analyzed the percentage of mortgages offered to adult Gen Z users of LendingTree’s online lending marketplace in 2021 and ranked the 10 most popular metros among that age group. National Mortgage News spoke to local professionals who explained why Gen Zers are saying no to ultra-expensive coastal markets and choosing to settle down in these markets instead.

Some of the quotes have been edited and condensed for clarity.

Buildings at Virginia Beach, Virginia.

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Virginia Beach, Virginia

Share of mortgages offered to Gen Zers: 12.38%
Average Gen Z homebuyer age: 22.04
Average credit score among Gen Z homebuyers: 694
Average down payment amount among Gen Z homebuyers: $18,699
Average requested loan amount among Gen Z homebuyers: $214,253

Expert: Vanda Kennedy, a real estate agent with World Class Realty. Kennedy has worked in the market since 2016.

Are Gen Zers buying homes in Virginia Beach?
“My youngest customer was 19. I’ve had several that were under 25. Some of them blew me away. We have the highest concentration of military in the country, a lot of VA (borrowers). A good majority of my buyers come from relocation. Sometimes parents are pushing them. A lot of them don’t realize they can do it.”

“Virginia Beach never had a skyline. It was never downtown with tall buildings or anything like that. Downtown is Town Center, it’s got high-end restaurants, comedy clubs. It’s up-and-coming. That’s probably going to be a mecca, younger people love that. Of course you can go to the ocean, that’s definitely popping for the young people in the evening. It’s very clean. There are very few areas that are dangerous. It has the lowest tax bill of the seven (Virginia) cities.”

St. Louis, Missouri.

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St. Louis, Missouri

Share of mortgages offered to Gen Zers: 12.82%
Average Gen Z homebuyer age: 22.31
Average credit score among Gen Z homebuyers: 700
Average down payment amount among Gen Z homebuyers: $17.823
Average requested loan amount among Gen Z homebuyers: $172,316

Expert: Brian McRae, a branch manager at Flat Branch Home Loans. McRae has worked in the St. Louis market for 20 years.

Are Gen Zers buying homes in St. Louis?
“Our team is kind of seeing a mix. The price point is a challenge for them with appreciation happening so quickly. Anything under $400K to $500K has just been incredibly hot. That price point at $400K to $500K isn’t really a Gen Z price point unless they have a benefactor. It’s probably at the upper end of the Gen Z demographic but we’re seeing some of the medical professions, when they’re getting jobs, we’re seeing some activity there.”

Downtown Birmingham, Alabama, from Vulcan Park.

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Birmingham, Alabama

Share of mortgages offered to Gen Zers: 13.05%
Average Gen Z homebuyer age: 22.36
Average credit score among Gen Z homebuyers: 699
Average down payment amount among Gen Z homebuyers: $15,869
Average requested loan amount among Gen Z homebuyers: $173,969

Expert: Ben Hedden, a broker at B’Ham Realty. Hedden has worked in the region for three years.

Are Gen Zers buying homes in Birmingham?
“They’re buying in places where maybe the school zone isn’t great but [it’s] a very hip, close to the city kind of location. For some of these Gen Z buyers, one area in particular is the Crestline neighborhood. It’s strictly young professionals out there. They pay a premium for that area. It doesn’t have schools. It’s close to the city and a really good location.”

“There are a lot of recent graduates that are definitely focused on buying. I think this younger generation just understands there’s no reason to waste time renting, at least if you can buy. Just from all the people I’ve spoken to, if they play with a mortgage calculator once they’re going to realize it’s cheaper to buy than rent.”

Minneapolis, Minnesota

Share of mortgages offered to Gen Zers: 13.06%
Average Gen Z homebuyer age: 22.18
Average credit score among Gen Z homebuyers: 706
Average down payment amount among Gen Z homebuyers: $24,254
Average requested loan amount among Gen Z homebuyers: $214,731

Expert: Charles Dailey, manager and mortgage loan officer at iLoan. Dailey has worked in the Minneapolis region since 1997.

Are Gen Zers buying homes in Minneapolis?
“I’ve been seeing these kids for four years. A nuance about Minneapolis, year after year, if you look at the states and look for the highest average credit score by state, Minnesota, it’s always there. If you look at the savings rate, they’re not necessarily always at the top but usually in the fight. I was consulting with St. Paul Public Schools to do a home buying and real estate class. Most people are learning behaviors from their parents. The savings and credit management are long-standing habits of their parents.”

“Right after Lake Street was the heartbeat of all those protests, two blocks off, there was a $250K house, this kid got lost in 52 offers. They’re not intimidated by what’s going on here at all. The Twin Cities has one of the most diversified economies of the metro statistical area. You can’t find a dominant sector here.”

Phoenix, Arizona

Share of mortgages offered to Gen Zers: 13.87%
Average Gen Z homebuyer age: 22.11
Average credit score among Gen Z homebuyers: 705
Average down payment amount among Gen Z homebuyers: $29,091
Average requested loan amount among Gen Z homebuyers: $272,295

Expert: Nick Heth, a broker owner at Phoenix Mortgage Brokers. Heth has worked in the Phoenix market for 18 years.

Are Gen Zers buying homes in Phoenix?
“It’s a great, well-rounded metropolitan area. Retirement communities tend to be on the outskirts whereas in midtown, downtown, downtown Scottsdale, it’s going to be more lively with entertainment, bars and restaurants. The economy is growing. As a young person here, you’re not paying as many taxes. You have the opportunities in Phoenix you won’t have elsewhere. Phoenix isn’t stricken with the old money hierarchy in such a way that you can’t climb ladders quickly.”

“I’ve got a 23-year-old buying right now, a $210K condo. This young gal got her stuff together and purchased, ready to build some equity. As competitive as it’s been, that means a 1-bedroom, 1-bathroom condo, a 5% down payment-type deal. If you did want to do 20%, a year ago you’re looking at $72,585 in Phoenix. Tell me what 18 to 24 year old has that kind of money? And then today, that number is $94,952. You’re almost talking about six figures in savings.”

Indianapolis, Indiana

Share of mortgages offered to Gen Zers: 14.08%
Average Gen Z homebuyer age: 22.31
Average credit score among Gen Z homebuyers: 699
Average down payment amount among Gen Z homebuyers: $14,785
Average requested loan amount among Gen Z homebuyers: $190,569

Expert: Timothy Ayers, a loan officer with Grandview Lending. Ayers has worked in the Indianapolis market for 23 years and has been in the mortgage business for over 30 years.

Are Gen Zers buying homes in Indianapolis?
“I have seen an uptick. I’m looking at my board and I can see 3 out of 20. That’s getting near 14%. I am in the older crowd. I’m nearing retirement. I really don’t care to be involved in the downtown, younger crowd, but having said that, I have been downtown enough to know and have friends whose children live downtown and absolutely love it.”

“You’d be lucky to buy a 1-bedroom suite, a 1-bedroom condo downtown. It seems the Generation Z homebuyers here in Indy. They like to be downtown. It’s a tough market because of the shortage of housing. It’s difficult to overcome the bidding wars that are pushing Gen Z buyers out.”

Cincinnati, Ohio

Share of mortgages offered to Gen Zers: 14.27%
Average Gen Z homebuyer age: 22.04
Average credit score among Gen Z homebuyers: 702
Average down payment amount among Gen Z homebuyers: $17,375
Average requested loan amount among Gen Z homebuyers: $184,447

Expert: Steve Collins, a branch manager and home loan specialist at Churchill Mortgage. Collins has worked in the Cincinnati region for 28 years.

Are Gen Zers buying homes in Cincinnati?
“I have worked with quite a few. They seem to be a lot more knowledgeable for someone coming new into the marketplace. They seem to be a little more educated, but it’s a wide variety. In Cincinnati we’re right there [at $184K], that’s basically a starter home-ish type price range. My particular loan average for that age demographic is usually around $200K.”

“What I have found more recently in the last six to nine months, people are moving out of the area because they heard the Midwest is an awesome place to start a career, raise families and so forth. We’ve done a lot of reclamation with downtown Cincinnati. It sits right on the river. It’s a beautiful place to hang out and visit. A lot of people are coming in. They’re not moving to the suburbs. There’s some downtown projects that have made the city quite beautiful and a nice place to live and work and socialize.”

Oklahoma City, Oklahoma

Share of mortgages offered to Gen Zers: 15.34%
Average Gen Z homebuyer age: 22.17
Average credit score among Gen Z homebuyers: 697
Average down payment amount among Gen Z homebuyers: $19,690
Average requested loan amount among Gen Z homebuyers: $173,752

Expert: Brett Baldwin, mortgage sales manager at Gateway Mortgage in Oklahoma City. Baldwin is a 20-year veteran of the mortgage industry.

Are Gen Zers buying homes in Oklahoma City?
“We see young people, some of them have made smart decisions, [but they] still have challenges to buy. Besides the asset challenges, it’s employment stability. We right now have a lot of people, due to COVID, who have had poor employment stability. A lot of those young people are working in the service sector because of time or school or otherwise, but have not had good, long-term stable employment. They have variable income, which is a real barrier to get loan approval right now.”

“We have a lot of up-and-coming, more trendy neighborhoods. Oklahoma City’s maybe one of the few larger cities out there that has homes at a price point where buyers in that age range can actually enter the market. It’s not that they want to buy homes any more here, or find Oklahoma City more attractive. It’s if they can actually afford a house.”

Louisville, Kentucky

Share of mortgages offered to Gen Zers: 15.68%
Average Gen Z homebuyer age: 22.09
Average credit score among Gen Z homebuyers: 699
Average down payment amount among Gen Z homebuyers: $14,268
Average requested loan amount among Gen Z homebuyers: $171,773

Expert: Andy Shelby, a senior loan officer and assistant branch manager at Broker House Lending. Shelby has worked in the region for eight years.

Are Gen Zers buying homes in Louisville?
“Absolutely. I’ve actually closed probably about seven or eight of them in the past, less than a year, some as young as 19 years old. They buy $130K to $170K homes, just good starter homes, 3-bedroom 1-bathroom with a garage, nothing fancy. Normally they’re turnkey. I’ve never had one that wants a fixer-upper. I’ve done some deals for General Electric folks, Ford folks that literally just got out of high school, got into a big factory job. They make good money and got a 401K already and just jumped right into a house. I do a lot of Fannie Mae HomePossible, HomeReady programs for that medium-income dynamic.”

“We have a lot of music festivals here. We’re a big foodie town. We’re a big music town. We’ve got the Muhammad Ali Center, nice sports complexes with the Yum Center and Papa John’s Cardinal Stadium, the state fairgrounds are here. It really is kind of a younger generation movement here in Louisville.”

Salt Lake City, Utah

Share of mortgages offered to Gen Zers: 16.60%
Average Gen Z homebuyer age: 21.82
Average credit score among Gen Z homebuyers: 701
Average down payment amount among Gen Z homebuyers: $28,874
Average requested loan amount among Gen Z homebuyers: $291,952

Expert: Troy Sperry of Keller Williams’ Red Sign team. Sperry is a 15-year veteran of the industry.

Are Gen Zers buying homes in Salt Lake City?
“We’ve seen quite a few younger buyers, I’ve got a few that I’m working with right now. Most of them are trying to get to $400K as much as possible, which is pretty tough to do. The $291K number, it would be a condo. You can find some sub-$300Ks, it’s going to be outside either Salt Lake City or outside the Provo-Orem area.

“We do have a few young people that are coming in from out of state. I feel like a lot of them are here for the outdoors scene, but also, I think [The Church of Jesus Christ of Latter-day Saints] still pulls a little bit from other states. They want to come here and be in the culture. A lot of parents are coaching their kids to come here from California because it's much cheaper to be out here than it is out there. A lot of the youths I'm dealing with right now, these folks are local kids. They grew up here in Utah. They want to stay where they’re close to home, try their best to find something that they can afford.”