The Next Generations of Homebuyers: A Closer Look at Millennials and Gen Z

Did you know the average first-time homebuyer is now nearly 40 years old? For Millennials and Gen Z, the path to homeownership looks different than it did for Baby Boomers and Gen X, when the typical homebuyer was in their late 20s.

With rising costs, shifting priorities, and new tools at their disposal, these generations are redefining what it means to become a homeowner.

Why is Homeownership So Hard for These Generations? 

Since the pandemic, the housing market has faced inflation, high interest rates and a rollercoaster of market conditions:

•  A sharp rise in home prices; the median value for a new home in 2000 was approximately $119,00
• Limited resale inventory
• Persistently high mortgage rates around 7%

With the median home price in 2025 being $422,000, a 20% down payment - roughly $84,000 - is a tall order.

 | 65% of renters spend more than 30% of their income on housing.

Millennials: Cautious but Ready 

Born between 1981 and 1996, Millennials are between their late 20s to early 40s. Many have delayed homeownership due to student debt and stagnant wages, but they’re now entering the market with more financial stability. 

In 2024, Millennials made up 38% of all homebuyers, the largest sector of homebuyers represented out of any generation. They prioritize commuting costs and affordability, with over half using personal savings for down payments.

| Millennials are gravitating toward affordable metros like Indianapolis, IN, Jacksonville, FL or Pittsburg, PA where their dollars stretch further.

Gen Z: Tech-Driven and Motivated

Gen Z (born between 1997 and 2012) may only account for 3% of current buyers, but they lead in intent. Surprisingly, their homeownership rate at age 24 is higher than Millennials or Gen X at the same age, according to Redfin.

This group is known to be pragmatic and tech-savvy. Affordability is their top concern, followed by square footage. Gen Z expects digital-first experiences: virtual tours, online closings, and smart home features influenced by social media.

Gen Z is particularly prone to underinsuring their homes due to cost concerns and lack of trust in insurance providers. Sixty-five percent say they’re likely to reduce insurance coverage, even as 69% identify concerns about potential property damage.

 Insurance advisors must bridge the gap by offering transparent, tech-friendly education on coverage options and the claims process to help them understand the long-term risks of cutting corners.

| 46% cite affordability as the most important factor.

How These Generations Make It Work

According to an article by National Mortgage Professional, technology is continuing to play a significant role. Real estate agents are leveraging platforms like Zillow and Facebook to reach younger audiences, while top-notch listings with professional photos, virtual tours and video content are becoming essential.

When it comes to financing, Millennials and Gen Z buyers are leveraging first-time homebuyer programs, down payment assistance, and even co-buying with friends or family. These approaches can complicate ownership structures and coverage needs, making it essential for insurance agents to pay close attention to named insureds and rental clauses. 

For insurance agents, this also presents an opportunity to educate buyers on builders risk insurance and other relevant coverage options. To support financial conversations with lenders, download our resource: Guiding Financial Conversations About Builders Risk Insurance.

How Builders and Insurance Agents Are Adapting 

Builders are responding to demand with:

• Compact, energy-efficient homes
• Smart tech integrations
• Flexible housing options like duplexes, triplexes and accessory dwelling units

Multifamily construction is also on the rise, offering affordability and flexibility for younger buyers. 

Millennials and Gen Z are more likely to purchase fixer-uppers. With high mortgage rates and inflation, 55% of homeowners planned to take on more DIY projects in 2025.

And, according to a This Old House survey, 60% of Millennials and 56% of Gen Z homeowners had renovation plans for 2025. 

This makes home remodeling insurance a critical conversation. Agents should proactively educate clients on why course of construction coverage is needed during residential renovations to protect their investments.

Construction Outlook 

With over 1.5 million homes for sale today – the highest inventory since 2019 – improvements are finally on the horizon for single family housing. As interest rates stabilize and new construction ramps up, the future could bring more opportunities for first-time buyers.

As Millennials and Gen Z reshape the housing landscape, insurance agents have a unique opportunity to support their journey. Understanding their financial constraints, digital habits, and homebuying ambitions will be key to helping these generations protect their investments and navigate homeownership with confidence. By offering tech-friendly services, educating clients on builders risk insurance during renovations, and tailoring coverage to support co-buying, smart home features, and sustainability upgrades, agents can build trust and long-term relationships.