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- A Redfin report found that 30% of Gen Zers owned homes at age 25 in 2022.
- The rate surpasses those of millennials and Gen Xers when they were the same age.
- Gen Zers were greeted by a stronger labor market as they established their careers.
Gen Zers may be the new kids on the block, but when it comes to home buying they are coming out on top.
That's according to a report from Redfin that has found the generation has surpassed their peers in homeownership at the earliest stages of their adulthood. In 2022, 30% of 25-year olds owned their home, slightly higher than the 28% rate for millennials and 27% rate Gen Xers when they were that age, data from the real estate brokerage shows.
So how did Gen Z gain the competitive edge? It all comes down to a healthy labor market, Daryl Fairweather, the chief economist at Redfin, told Insider.
"It has a lot to do with the timing of when Gen Z entered the labor market versus when millennials did," Fairweather said. Due to the economic headwinds of the 2008 recession, millennials had a much more difficult time establishing themselves financially early in their careers compared to their younger counterparts, she said.
Gen Z homebuyers are giving millennials a run for their money. The generation — consisting of people born between 1997 and 2012 — has greatly benefited from a labor market that bounced back with a vengeance since the early days of the pandemic. More than 24 million jobs have been added to the economy since April 2020, and total employment now exceeds pre-pandemic levels, according to the US Bureau of Labor Statistics.
With the stronger job prospects and also higher wages, Gen Zers were in a good position to take advantage of the rock-bottom interest rates that helped fuel the home buying frenzy in 2020 and 2021.
"Record-low mortgage rates, the ability to move somewhere more affordable thanks to remote work, and bumps in their paychecks helped some Gen Zers break into the housing market," Fairweather said.
To be sure, Gen Zers have hurdles to homeownership including the severe shortage of available homes and steep student debt, Redfin noted in its report. But overall, Gen Z is taking the real estate market head on.
Take Grace Gabriel, who closed on a $505,000 three-bedroom townhouse in Laurel, Maryland, in 2022, not long after graduating with her MBA.
Gabriel's finances were sound after getting a job as a business-process-development analyst, she told Insider as a 23-year old last year. On the advice of a mortgage lender, she had put herself on a "financial diet" and "cut out carbs" like online shopping to focus on paying down debt and raising her credit score.
The increased focus on social media by each successive generation may have been another factor for Gabriel.
"I watched a lot of YouTube videos by other people my age about how they were able to buy their homes at 21 and 22," she said. "It really pushed me."
As the real estate market boomed along with the economy, Gen Z took notice of that, too.
Soli Cayetano, a 25-year old self-described "hustler," has built a mini real-estate empire since taking ownership of a two-bedroom house in Cincinnati in 2020 for just under $100,000.
Watching the recession unfold after the last financial crisis was instructive, she said.
"We learned a lot from that recession" in 2008, she told insider. "One of the things we learned is that real-estate values bounce back and keep going up."