The age-old American dream of buying a home has become increasingly expensive these days, there’s no doubt about it. Interest rates are still high, there’s a shortage of available homes, and the median sale price of a home has reached new heights — $433,229 as of August 2024 to be exact, according to Redfin.
Check Out: 20 Best Cities Where You Can Buy a House for Under $100K
Read Next: How To Get Rich in Real Estate Starting with Just $1,000
However, despite higher costs, a stunning 2 in 5 mortgages are going to Gen Zers as of 2023.
As per a new Redfin report, the younger generations are taking out mortgages more than any other generation–39.7% of new mortgages issued in 2023 went to homebuyers under 35, 26.5% went to buyers aged 35-44, 16.1% went to buyers aged 45-54, 10.8% went to buyers aged 55-64, and just 5.4% went to buyers aged 65-74.
It’s shown that Gen Zers and millennials are “aging into homeownership,” with the median age of first-time U.S. homebuyers currently standing at 35. Young people are taking out the majority of mortgages because they’re reaching prime homebuying age, they’re still gaining financial stability, and they’re growing their families. They’re also less likely than older people to have cash on hand to buy a home.
Learn More: These 5 Cities Are Becoming Unpopular With Baby Boomers — Here’s Why
Federal Reserve Cuts Rate: What’s Next?
Now that the Federal Reserve made the decision to cut the federal funds rate by 0.5% just a few days ago, mortgage rates will likely drop even further — they’ve already dropped slightly since the rate cut was announced. This should come as welcome news to young home buyers looking to get their foot in the door.
According to The Federal Reserve Bank of St. Louis, the 30-year fixed rate mortgage average in the U.S. currently hovers at around 6.09% as of Sept. 19. To put this into perspective, this is down from a recent 7.79% high in October 2023.
However, not all states and cities are the most popular for Gen Zers. Here’s a list of are the best and worst states for the average Gen Zer to buy a home, according to Redfin:
Top 10 Best Locations for Gen Z Homebuyers
Pittsburgh, Pennsylvania was the top city for young homebuyers among the 50 metros analyzed, where nearly half (48%) of its new mortgages went to people under 35.
Pittsburgh is followed by:
- Cincinnati, Ohio (46.5%)
- Philadelphia, Pennsylvania (46.3%)
- Detroit, Michigan (46.1%)
- Warren, Michigan (46.0%)
- Minneapolis, Minnesota (45.7%)
- Cleveland, Ohio (44.1%)
- Denver, Colorado (43.7%)
- Milwaukee, Wisconsin (43.7%)
- St. Louis, Missouri (43.3%)
10 Worst Locations for Gen Z Homebuyers
West Palm Beach, Florida, was the least popular city for young homebuyers among the 50 metros analyzed, where only 27.8% of its new mortgages went to people under 35.
West Palm Beach is followed by:
- Fort Lauderdale, Florida (28.8%)
- Anaheim, California (31.7%)
- Orlando, Florida (32.0%)
- Las Vegas, Nevada (32.9%)
- Miami, Florida (32.9%)
- Tampa, Florida (33.3%)
- Los Angeles, California (33.6%)
- Oakland, California (34.1%)
- Sacramento, California (34.4%)
More From GOBankingRates
- 6 Subtly Genius Moves All Wealthy People Make With Their Money
- 7 Five Below Items Retirees Need To Buy Before Fall Ends
- 6 Strategies Anyone Can Use to Pay Off Debt
- I'm a Debt Expert: Here's How Social Media Warps Our Perceptions of Debt
This article originally appeared on GOBankingRates.com: 10 Best and Worst States for Gen Z To Buy a Home
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
