The Next Generation of Homebuyers: How Millennials and Gen Z Are Shaping Today’s Mortgage Market

As Millennials and Generation Z become a larger share of the nation’s workforce and future homebuyers, their preferences and financial realities are reshaping the mortgage landscape. These generations continue to view homeownership as an important long-term goal, yet they are navigating a very different housing market than buyers from previous generations. Economic constraints, evolving lifestyle priorities, and the rise of remote work all play a role in how they approach housing decisions — and in turn, how lenders must evolve to meet their needs.

Recent data shows only 26% of Gen Z adults own homes, compared to 55% of Millennials, 73% of Gen X, and 80% of Baby Boomers. Millennials reached majority homeownership later than any prior generation, and the average first-time homebuyer is now 38, up from 29 in 1980. High prices, elevated rates, and limited savings are among the most significant barriers for younger buyers.

Flexibility Is a Leading Priority

When it comes to home ownership, one of the clearest distinctions between younger and older generations is the premium placed on flexibility. The continued rise of remote and hybrid work has allowed many young professionals to reconsider where they live and how long they remain in any one place. Renting for longer periods, choosing smaller or more affordable starter homes, or relocating to suburban and secondary markets has become increasingly common as buyers balance mobility with affordability.

Many younger buyers are also placing greater emphasis on work–life balance and personal goals such as travel, experiences, and career development — all of which can influence the timing of a home purchase. This represents a noticeable shift from earlier generations who often viewed homeownership as an immediate milestone of adulthood.

Limited Housing Inventory Shapes Buyer Behavior

Housing inventory constraints are another critical factor shaping how Millennials and Gen Z approach homeownership. Limited availability of entry-level and moderately priced homes has intensified competition, placing additional pressure on younger buyers who are already navigating affordability challenges.

In many communities, low inventory has led to fewer options, faster decision timelines, and increased competition for well-located properties. As a result, younger buyers often expand their geographic search, consider smaller homes or properties that require updates, or delay purchases while waiting for more favorable market conditions. This reality reinforces the importance of flexibility, preparation, and realistic expectations throughout the homebuying process.

Sustainability and Climate Awareness Influence Choices

Environmental considerations play a larger role in the housing decisions of Millennials and Gen Z. Two-thirds of Millennials report heightened concern about weather-related home damage, and both generations show a stronger willingness to relocate based on climate risks. Energy-efficient homes, sustainable building features, and walkable or environmentally focused neighborhoods continue to rise in popularity. Interest in alternative housing options — including smaller or more efficient homes (in terms of energy and cost) — reflects both economic and environmental motivations.

Digital Expectations and Modern Lending Needs

Having grown up in a digital environment, younger buyers expect mortgage experiences to be transparent, intuitive, and available through digital channels. Online applications, real-time status updates, secure document upload, and digital communication tools are no longer viewed as enhancements; they are standard expectations.

Younger borrowers want the ability to manage much of the process from their phones or laptops but also value the option to speak with a knowledgeable lender when questions arise.  As Clients skew younger, financial institutions must adapt to these changing preferences and that starts with transforming digital tools. This balance of digital convenience and human support has become a defining need for this group and plays an important role in reducing uncertainty for first-time homebuyers.

Flexible Financing Matters More Than Ever

Affordability pressures make adaptable financing options especially important. Many younger homeowners turn to home equity products when renovating, consolidating higher-interest debt, or preparing for major expenses.

Home Equity Lines of Credit (HELOCs) offer the ability to access funds as needed with variable rates tied to the prime rate — providing flexibility but requiring awareness of how rate changes may affect monthly payments. Emphasizing borrower education around draw periods, repayment phases, and rate adjustments helps Clients plan effectively.

Home equity loans, on the other hand, provide fixed-rate stability for borrowers who prefer predictable monthly payments or are undertaking planned home improvements. For first-time buyers seeking to build equity through renovations, fixed-rate options can help create long-term financial stability.

Guidance and Support Tailored to a New Generation of Buyers

As younger buyers navigate a more challenging and complex housing market than previous generations, trusted guidance plays a critical role in helping them chart the right path. Millennials and Gen Z value transparency, education, and partnership from their lenders, especially as they balance long-term financial goals with near-term affordability constraints.

At WSFS, this begins with helping buyers understand total homeownership costs, including taxes, insurance, maintenance, and the long-term implications of different loan structures. Providing this clarity early in the process allows customers to evaluate financing options with a realistic view of what they can comfortably afford. Tools like WSFS’s mortgage calculator help buyers estimate monthly payments and explore different scenarios before moving forward with confidence.

WSFS has also focused on making the mortgage process more intuitive for younger borrowers by enhancing digital tools such as online applications, secure document upload, and real-time communication throughout the process. These resources offer convenience while still being supported by local lending teams who can answer questions and provide personalized guidance when needed.

Together, these efforts help ensure that emerging buyers feel prepared for each step of the process and understand how their financing choices align with their long-term financial goals — an approach that has become increasingly important as Millennials and Gen Z continue to shape the future of homeownership. To learn more or begin the homebuying journey, connect with a WSFS lender for personalized guidance and support.