Potential Gen Z Homebuyers Seeking Midwest Metros to Call Home

As first few members of Generation Z begins to enter their prime homebuying years, they're still an unknown variable in the housing market adding to the glut of people looking (or waiting) to get into a home, and will surely exacerbate affordability, inventory, and bidding wars.

Gen Zers (now aged 18 to 25) make up a noteworthy share of homebuyers—accounting for an average of 14.91% of potential buyers across the nation's 50 largest metros—according to a new analysis from LendingTree, a figure experts say will likely grow over the coming years.

Though many Generation Zers born between 1997 and 2012 are children or young teens, some older members are attending college, starting careers, and buying homes for the first time.

So, where are Gen Zers looking to buy?

Top 10 Most Popular Metros for Gen Z Homebuyers

1. Salt Lake City
2. Oklahoma City
3. Birmingham, Alabama
4. Indianapolis
5. Cincinnati
6. Louisville, Kentucky
7. Minneapolis
8. St. Louis
9. Nashville
10. Kansas City, Missouri

Top 10 Least Popular Metros for Gen Z Homebuyers

1. San Francisco
2. New York
3. San Jose, California
4. Los Angeles
5. Miami
6. Washington, D.C.
7. San Diego, California
8. Sacramento, California
9. Riverside, California
10. Chicago

Key Findings:

• At 22.59%, Salt Lake City has the largest share of mortgage requests from Gen Zers. Though the average mortgage amount in Salt Lake City is higher than in many of the nation’s other large metros, it’s a hot spot for younger homebuyers, likely owing to — among other factors — its strong jobs market and a good blend of urban and rural amenities.
• After Salt Lake City, relatively inexpensive Oklahoma City and Birmingham, Ala., are the next most popular metros among Gen Z buyers. Respectively, 22.36% and 20.79% of mortgage requests in these two metros come from Gen Zers.
• In expensive San Francisco, New York and San Jose, Calif., the smallest percentage of mortgages are being requested by Gen Zers. Respectively, 7.76%, 8.88% and 9.70% of mortgage requests in these metros come from Gen Zers. While these shares are lower than the 50-metro average of 14.91%, they’re still nothing to sneeze at. As Gen Zers age over the coming years, these shares will likely rise even higher.
• All in all, six of the 10 least popular metros for potential Gen Z buyers are in California. This shows how much of an obstacle the state’s expensive real estate can be for younger buyers to overcome.
• The average credit score of Gen Z mortgage borrowers can vary widely across the U.S. The average credit score among Gen Zers who made mortgage purchase requests is highest in Buffalo, N.Y., at 707 — 56 points above the average score of 651 in New Orleans, where it’s the lowest.
• Down payment amounts also vary by metro. There’s a $59,034 difference between the average down payment among potential Gen Z homebuyers of $77,786 in San Jose and $18,752 in Oklahoma City — the highest and the lowest across the 50 largest metros.
• Like credit scores and down payments, mortgage amounts can change quite a bit depending on where buyers live. In San Jose, the average mortgage amount offered to Gen Zers is $541,436. That’s $347,836 more than the $193,600 average in Cleveland, where potential Gen Z homebuyers borrow the least.

With these challenges, cheaper alternatives to buying, like renting or living with family, may remain the best option for many Gen Zers across the nation.

Click here to see the report in its entirety.