AI and creative financing define Gen Z homebuying trends

When Sonia turned 25, she found herself doing something she never expected so soon — scrolling real estate listings on her lunch break. Like many in her Gen Z cohort, Sonia wasn’t necessarily ready to buy a home, but the rising cost of rent and the uncertainty of her long-term housing options nudged her toward something more stable. Still, entering the housing market wasn’t a simple as she had imagined.

With mortgage rates hovering near 7% and home prices far outpacing what she earned, Sonia quickly realized that buying in the city she lived in wasn’t realistic. Instead, she started looking in smaller towns — places like Fargo and Omaha — where the cost of a starter home didn’t completely derail her financial future. But even in more affordable markets, the numbers were tight. A modest $250,000 home with a 10% down payment translated into a monthly mortgage that took up nearly 40% of her income. That didn’t even include rising property taxes or homeowners’ insurance.

To make it work, Sonia got creative. She relied heavily on tech tools, using online calculators, virtual tours, and AI-powered apps to explore neighborhoods, estimate returns, and organize her finances. Then, finally, she bought a duplex, moved into one side, and began renting out the other. It was her version of house hacking — a strategy that more and more Gen Z buyers are turning to as they try to offset monthly costs and qualify for loans.

Sonia wasn’t alone in her approach. Her generation is leaning into new models of ownership: teaming up with roommates, buying homes with friends, or sharing space in ways previous generations might not have considered. They’re bringing a different mindset to homeownership — one shaped by economic headwinds, student debt, and a lifetime of watching their parents navigate the highs and lows of real estate.

In this episode of Beyond the Buildings, host Maiclaire Bolton Smith and Cotality economist Molly Boesel explore the trends shaping Gen Z’s path to property ownership — what’s driving them, what’s holding them back, and how their creativity is changing the landscape of housing for everyone.

In this episode:

• 2:00 – How big of a presence is Gen Z in the housing market? Are they having an easier or more difficult time buying homes than previous generations?
• 3:29 – What sort of homes are Gen Z buyers looking for?
• 6:14 – Are Gen Z buyers spending more than the recommended amount when they purchase homes? Is homeownership out of reach for much of this generation?
• 10:49 – Erika Stanley looks at the numbers in the housing market in The Sip.
• 11:57 – Is house hacking a possible path to homeownership for this generation?
• 15:12 – How are affordability issues propelling Gen Z buyers to look into creative financing options?
• 18:00 – Is AI changing how Gen Z buyers shop for homes?

‍

Transcript

Molly Boesel:

Yeah, I think we are just going to see some low numbers of Gen Z buyers, especially in this current environment. We talk about mortgage rates, they're just going to stay higher, longer, so they're going to be needing to be okay with getting a mortgage in the six point half 7% range, but things are going to still be hard to afford for them, but I think their presence in the market will gradually increase over time.

Maiclaire Bolton Smith:

Welcome to Beyond the Buildings by Cotality. I am your host Maiclaire Bolton Smith, and I'm just as curious as you are about everything that happens in the property industry. On this podcast, we satisfy our collective curiosity, explore questions from every angle, and look beyond the obvious. With every conversation, we illuminate what is possible. Gen Z is the latest generation to enter the property market. This generation whose members were born between 1997 and 2013 is reshaping property ownership from house hacking to co-buying. Gen Z is getting creative in a market that is faced with high interest rates, low inventory, and fierce competition. So what is driving these trends and what does this mean for housing economics To talk about this trend and how it's influencing the property market in unexpected ways, we have one of our favorite guests back with us today, Molly Boesel from Cotality's Office of the Chief Economist. Molly, welcome to Beyond the Buildings.

Molly Boesel:

It's nice to be here. This is one of my favorite things todo every quarter.

Erika Stanley:

Before we get too far into this episode, I wanted to remind our listeners that we want to help you keep pace with the property market. To make it easy, we curate the latest insight and analysis for you on our social media where you can find us using the handle at totality on LinkedIn and Facebook and at CoreLogic Inc. Everywhere else. But now let's get back to Maiclaire and Molly.

Maiclaire Bolton Smith:

I love it too. Okay, so let's just jump into this then, I guess. So, Gen Z, we are talking, and now Gen Z are at most 28 years old, and that kind of seems young to be buying a house to me, but I do know that some of these Elder Gen Zs are in the property market and getting into buying homes, but are they a huge presence in those purchasing homes yet? Where do we stand with this Gen Z crowd?

Molly Boesel:

Yeah, like you said, Maiclaire Gen Z is at most 28 this year, and they're really just starting to enter the market in 2024. Gen Z made up about 10% of buyers, and that's up from about 5% just two years before.

Maiclaire Bolton Smith:

So it's still a small share of those buying homes, but an interesting share at that. So that's why we really want to talk about this today. So when we look at this cohort, are they having, I guess if we look at it compared to other generations purchasing homes, are they having a harder time? Are they having an easier time? There's a lot of things going on in the property market right now.

Molly Boesel:

We could go on for about three days on that, but

Maiclaire Bolton Smith:

Yeah,

Molly Boesel:

I'd say they're having a harder time than most generations buying, but probably pretty similar to the experience the millennials were having, especially when they were in their mid to late twenties.

Maiclaire Bolton Smith:

Not surprising with the state of the market right now. I think anybody trying to buy a home right now is definitely harder. So I think compared to other generations, I can see that it maybe is more difficult for them. I guess the other thing is if we compare them even to just the Millennials, the generation previous to them, are they looking for the same kind of house? I think you kind of always think of starter homes as being a three bed, two bath, maybe a townhouse, maybe a condo. What are these young folk looking for?

Molly Boesel:

Yeah, yeah. So if we think about Gen Z, the 20, let's say, let's call 'em 25 year olds now compared to millennials, which are maybe in their early to mid-forties. But yeah, they'd be definitely looking for more of a starter home, something closer to job centers, more urban, more centrally located. Walkable is a very popular thing, but if we could compare Gen Z to what millennials were looking for when they were in their mid twenties, it's got to be pretty similar. It's really a lot about the stage of life someone's

Maiclaire Bolton Smith:

In. Okay. Is the starter home for most people a single-family home, or are people starting in things like condos in town townhomes, and has that changed over time?

Molly Boesel:

Condos are typically around 10% of the for sale market, but that's going to be mostly your first time buyers, and especially those who are looking for that more urban kind of setting.

Maiclaire Bolton Smith:

Okay. Okay. I guess too, when we start thinking of urban centers too, if we look across the country, is there a region of the country that's seeing more buyers in this Gen Z Age group?

Molly Boesel:

Well, it's not probably your urban centers. It's those parts of the country. So when you think about Gen Z, where they want to live is maybe a little different from where they can actually buy. So Gen Z or buying where it's affordable. We looked at the states that had the highest share of Gen Z applicants for mortgages. North Dakota was on top. Oh, interesting. Yeah, exactly. At first I thought, wow, that's interesting. I was like, oh, of course home prices are cheaper there. It was followed closely by Nebraska and Iowa.Interesting. And these places all have one thing in common, and that's that their median home price is a lot lower than the national average and a lot lower than some other places, especially California.

Maiclaire Bolton Smith:

Yeah. So they're in the market buying homes in markets where homes are affordable for them to

Molly Boesel:

Buy. Exactly.

Maiclaire Bolton Smith:

Got it. Okay. Yeah, that does make a lot of sense. Which I guess then leads to the question then is just because they can afford homes doesn't mean the homes that they want to buy are affordable, which is what we're seeing within these regions. But what's the average, I guess, financial burden that a home represents compared to the overall income that's typical of Gen Zs in this day and age?

Molly Boesel:

Yeah, that's a really important one. Let's think about the median home price. According to Cotality data, it's about $350,000. That sounds a little low to me, but for someone who's starting out that's pretty high now, someone just starting out wouldn't buy the median price home. Let's say they go for something less expensive, maybe $250,000, they're probably not going to putdown 10%, so let's say, or they're probably not going to put down 20%. They'll probably put down 10%. Interest rates are still pretty high. So if you combine all that together, their monthly payment would be about $1,500, and that's about 40% of the median monthly income of a 25-year-old last year. And that's at the top of that affordability level or where they'd be able to qualify for a mortgage. Now, haven't talked about those other two things we've been talking about a lot recently, and that is property tax and insurance. So depending on where they are, that could put them out of reach for being able to get a mortgage.

Maiclaire Bolton Smith:

Yeah, yeah. No, it's so fascinating. Actually, my eldest niece is in this category and is currently looking at buying a home, and first of all, looking at, and she does live in one of the lower cost areas, not one of the big metropolitan centers, but seeing what her budget is and what she's looking for and what's available, it's so hard. And I mean, I was nowhere near to the point of buying a home when I was this age.

But yeah, so it's so interesting to me to see these younger generation trying to get into the property market. And I guess as you and I have talked a lot, Molly, on some of these big barriers and other podcasts as well too. And the two that are really the top of anybody's radar are interest rates and lack of inventory. So can you talk just a little bit about the obstacles that well anybody has buying a home, but specifically related to Gen Zers? I think those things are a really big deal for some of us that have maybe bought a home and they're buying another home, they have something to compare to, but these Gen Zs don't really have anything to compare to. So do they understand that these are barriers, or do they just think that it's just difficult

Molly Boesel:

Because Oh, yeah. I think a lot of Gen Z just finds this homebuying completely out of reach right now. So you mentioned the lack of inventory, and especially at that lower end owners are staying in their houses longer. So what they bought is what we might call a quote starter home 15, 20years ago, has really turned into maybe their forever home. So they're not freeing up that kind of starter home inventory for the younger buyers. So that's one of your big barriers. Some of the other things stacked against the young buyer is student debt. When I mentioned that financial burden, I didn't include their student debt in there. I was just including their incomes and rents have been going up. So they haven't really had a chance to save for a down payment, especially if they're renting. And finally because they're young and they're at this certain stage of life, they're just not really settled enough to purchase. I can see that the location and type of home they want now may not be what they want in five to 10

Maiclaire Bolton Smith:

Years.

Molly Boesel:

And think about the 25-year-old. What have they seen in their lifetime? They've seen the Great Recession, right? True. They've seen the pandemics. They've seen people stuck with mortgages and homes they maybe didn't want to live in. So they're kind of thinking more of that long-term type of thing that a lot of people have ended up with.

Erika Stanley:

It's that time again, Cotality just dropped new numbers about what's happening in the housing market. Here's what you need to know.Florida home prices are outpacing the national average, but Miami is topping the charts at 60% above Florida's average price. As a result, 500,000 people left Miami between 2019 and 2023, they headed to other areas of the state likeTampa, Jacksonville, and Orlando to compound those soaring prices. The state's insurance market is on shaky ground with insurance costs out of sight compared to even a few years ago. Many Floridians are skipping coverage altogether. That choice is a risky one though, since many areas in Florida are projected to become some of the riskiest in the nation for natural hazards according to Cotality's analysis, there are also indications that Floridians are leaving the state. Almost half of outbound Floridians are headed to Georgia, the Carolinas,Tennessee, and Texas. To find out more about the pressures affecting Paradise,visit totality.com/insights. There's also a link in the show notes, and that'sthe sip. See you next time.

Maiclaire Bolton Smith:

So a term I heard recently that I personally had not heard before, maybe some of our listeners have heard, but is the term house hacking? Can you talk about this? What? What are different types of hacking and Yeah, why is it relevant?

Molly Boesel:

Yeah, so house hacking is not a new idea. I love the term though, because it's kind of modernizes an old term, I guess. But house hacking would involve using part of your home as a passive income, so that could involve renting.

Maiclaire Bolton Smith:

Oh, okay.

Molly Boesel:

Yeah. Yeah. So more renting out an unused portion of the home. It could be if they could buy a multi-unit property and rent out one of the units, they could rent out a room in their home, or it could even be as small as renting out a parking space. But again, just taking that unused portion, making money off of

Maiclaire Bolton Smith:

It. Yeah. In this idea of house hacking, are there any trends specifically with Gen Z?

Molly Boesel:

Well, I think Gen Z and millennials are going to be pretty similar with the house hacking trends. And the one thing that's changed overtime is just the technology. It's a lot easier to find a renter. You don't necessarily have to have someone with a lease. You can get a short term renter in there.

Maiclaire Bolton Smith:

Yeah, Airbnb type things.

Molly Boesel:

Exactly.

Maiclaire Bolton Smith:

Yeah. So I guess Gen Z and millennial tend to kind of approach things similarly, right? Do we think that, again, because of some of the headwinds in the industry and the barriers to entry, is it more likely that Gen Z is potentially more likely to be renting or wanting to stick to apartments versus trying to get into property ownership now

Molly Boesel:

Compared

Maiclaire Bolton Smith:

To millennials,

Molly Boesel:

Right? A combination of their young age, maybe the stage of life they're in, and then how expensive properties are to buy is Gen Z is a lot more willing to rent, also, a lot more willing to double up triple up with roommates. Oh,

Maiclaire Bolton Smith:

Let's talk

Molly Boesel:

About this concept.

Maiclaire Bolton Smith:

Yeah, a bit. And we talked about this last year on the podcast a little bit too, about co-buying a home, which probably another version of house hacking that you have either friends or multiple people going in on a mortgage to buy a home and splitting the home between two people or two families and buying with a roommate, or even I talked about too. But we have friends not in the Gen Z category, but two families that purchased a very large house together, and each of them lived in one, lived upstairs, one lived downstairs. Is that something that we're seeing from the Gen Z

Molly Boesel:

Creative? Yeah, exactly. This creativity, I guess you could say. I don't want to see creative financing. That's a whole different thing, but creative living situation, and again, it's not a new thing, but it's coming again when this generation is willing to live with other people and they don't have the income to live on their own. So yeah, doubling up the singles, renting out rooms all happened in the past, but with affordability issues making a comeback.

Maiclaire Bolton Smith:

Sure. Yeah. I guess that was my next question was is this something that has always existed or is it new because of the affordability issues, or is it just more prevalent now than it maybe has been in the past because of the affordability issues?

Molly Boesel:

Yeah, I think anytime you have affordability problems, you're going to find either more renters or you're going to find people willing to share their homes with others.

Maiclaire Bolton Smith:

Sure. Yeah. I guess the thing that immediately comes back to mind is the early eighties is when the interest rates, when interest rates were insane double digit, right? Yeah. Okay. You alluded to creative financing, Molly. So I do want to go there. So I guess we can put it in the context of house hacking too, but I guess the way mortgages are of you need to have a certain level of income to be able to qualify for a mortgage, and how do creative funding situations work if you're buying something that is partially going to be a revenue property in many ways too, does that

Molly Boesel:

Come into fact? That's where it gets really tricky because you need the qualifying income to purchase a home. So buyers can use rental income to qualify for a mortgage, and understandably, a lender is going to want to see the documentation around that. So they're going to want the lease, the rent amount, how stable that rental income is going to be. So in a situation like duplex, triplex you any multi-unit property that's already being rented out, that would be a way to an

Maiclaire Bolton Smith:

Established rental property.

Molly Boesel:

Yeah, exactly. An established rental property that the buyer could live in portion of it. But like you said, getting the funding otherwise could be a big obstacle. There could also be obstacles in zoning laws that could prevent renting out portion of a

Maiclaire Bolton Smith:

Home.

Molly Boesel:

That also a lot of places, it's just not really, they prevent the renter, but the number of vehicles a house can have. That's the way that zoning laws get around that. And then another obstacle would be someone renting out a part of their home might need to obtain extra insurance, which will raise the cost of that. So I think the house hacking, they're going to most likely either buy an established rental property or find a way to come up with the money upfront and then rent out of property to get that back

Maiclaire Bolton Smith:

Somehow. Sure. Sure. No, that makes sense. The other thing that comes to mind when we talk about Gen Z is technology. So this is, oh yeah,

Molly Boesel:

They've grown up with that technology,

Maiclaire Bolton Smith:

Right? Yeah. They've grown up not having anything that wasn't at the click of their finger, right? Everything was always at the touch of finger. So I guess it leads me to two things. This is the generation of, oh,I want something. I go on Amazon and I buy it. And the generation of gen AI has done so much for them. So I guess is there, and I am trying to think of how the best way to say this, but is there an expectation from the Gen Z buyers that I can click a button and buy a home on Amazon? Or is there an expectation that they could be like, yeah,

Molly Boesel:

Well, the other thing with Gen Z, because I've got one in my house, they really, really take their time, and they may want to click something and buy it on Amazon, but they're going to read all those reviews. So they're going to deliberate over it, I guess, for quite a while before they click that button. So

Maiclaire Bolton Smith:

Yeah,

Molly Boesel:

The technology is making it easier to locate the houses.Maybe they can drive by 'em, at least take a look at the outside the neighborhood before going inside. And also for getting that mortgage approval.That's a big change. They may not need to meet anyone in person. It could all be done electronically. That's crazy. So that's where it's going to be the difference, but I think they are going to still follow that same trend of wanting to go inside, look at the house, knowing that they most likely are going to be there for some time.

Maiclaire Bolton Smith:

Sure. No, that does make sense. My brain in the background is going Chat GPT, where's the best area for me to buy a home where home prices are going to increase over time that I can get in at a low cost? Now, maybe helping them find areas where they could potentially afford to buy.

Molly Boesel:

Exactly. Exactly. That upfront work is where they're going to use the technology, but they're going to want to go look at that place.

Maiclaire Bolton Smith:

Yeah, no, some things don't change, I guess. Okay. Crystal ball, Molly, things that don't change. I love the crystal ball. I wish I have one of these really. I know. I know I need to find you one at some point, but take out that crystal ball and look at it. What do you think the future for Gen Z home buyers looks like?

Molly Boesel:

Yeah, I think we are just going to see some low numbers of Gen Z buyers, especially in this current environment. We talk about mortgage rates, they're just going to stay higher, longer, so they're going to be needing to be okay with getting a mortgage in the six point a half, 7% range, but things are going to still be hard to afford for them. But I think their presence in the market will gradually increase over time. We probably had this conversation a while back. I don't know, we weren't doing this 15 years ago.Somebody had this conversation 15 years ago about millennials when they were in their late twenties and about were they going to buy and how were they going to make up the part of the market? And now there are pretty large share of buyers. So I think when you see the Gen Z age a little more, we'll see them coming into the market. And that begs the question for me, what's the next generation called name?

Maiclaire Bolton Smith:

I was going to ask the exact same question. Yes, I know they do.

Molly Boesel:

We're

Maiclaire Bolton Smith:

Letters. It's Alpha, the Alphas.

Molly Boesel:

Alpha Alphas. We're starting over with the letters. Okay.Yeah.

Maiclaire Bolton Smith:

Well, when we are still here in 15 years, Molly, we can talk about Generation Alpha and what they are doing in the housing market right now too. So Molly, it is always a pleasure and I look forward to next quarter when you're back with us again. And thank you so much for joining me again today and beyond the buildings.

Molly Boesel:

Yeah, this is great. Thank you.

Maiclaire Bolton Smith:

And thank you for listening. I hope you've enjoyed our latest episode. Please remember to leave us a review and let us know your thoughts and subscribe wherever you get your podcast to be notified when new episodes are released. And thanks to the team for helping bring this podcast to life producer Jessi Devenyns, editor and sound engineer, Romie Aromin, our Facts Guru Erika Stanley and social media duo, Sarah Buck and Makaila Brooks. Tune in next time.

Erika Stanley:

You still there? Well, thanks for sticking around. Are you curious to know a little bit more about our guest today? Molly Boesel is a senior principal economist in the Office of the Chief Economist at Cotality. She is responsible for analyzing and forecasting housing and mortgage market trends, including the single family rental market. She has a depth of experience in mortgage market analysis, model development, and risk analysis in the housing finance industry. Her original research for the Cotality Insights blog are frequently picked up in national and trade publications and are leveraged as news pieces. Read more of her story at cotality.com/insights.

‍