U.S. Cities Where Gen Z Has the Best Shot at Buying a Home

Generation Z is moving into homeownership despite rising interest rates, housing shortages, and inflationary pressures. Recent data from the National Association of Realtors (NAR) shows that 3% of homebuyers in 2024 were Gen Zers, the same percentage as in 2023. With housing affordability tightening, where can younger buyers realistically break into the market?

To understand where young Americans have the best shot at buying a home, the research team at Today’s Homeowner analyzed 99 of the largest U.S. cities across four key housing metrics: young person homeownership rates, housing cost burden, down payment-to-income ratio, and price-to-rent ratio. Together, these indicators highlight where buying a home is most achievable and sustainable for young Americans.

Gen Z is currently the youngest generation of homeowners to face the challenge of figuring out how to buy a house and finding suitable properties. However, affordability isn’t the only aspect that Gen Z homeowners struggle with, especially once they’ve achieved homeownership. Protecting such a significant investment can seem overwhelming, but Gen Zers can gain peace of mind with the best home warranty coverage and a comprehensive policy.

To identify specific cities that young Americans find most favorable for homeownership, the research team at Today’s Homeowner analyzed the following four key metrics:

• Gen Z homeownership rate: This is the number of young homeowners divided by the total number of young households.
• Percentage of Gen Z renters who are housing cost-burdened: This is the percentage of Gen Z renters spending 30% or more of their pretax income on rent.
• Down payment-to-income ratio: This is a 20% down payment on the typical home value from Zillow divided by the median household income for Gen Z individuals from the census.
• Price-to-rent ratio: This is the typical home value from Zillow divided by the typical annual rent from Zillow. A higher ratio indicates a favorable market for renters, while a lower ratio indicates a favorable market for potential homebuyers.

Most (and Least) Attainable Cities for Gen Z Homeownership

Detroit ranks first among the top 10 cities for Gen Z homeownership in the U.S. due to its affordability. Just over a third (33.7%) of Gen Z homeowners are cost-burdened in Detroit, where the price-to-rent ratio (4.61) and down payment-to-income ratio (0.55) are also the lowest.

Nationwide, 36.3% of Gen Z homeowners are cost-burdened, with a 15.08 average price-to-rent ratio and a 1.62 average down payment-to-income ratio.

Chesapeake, Virginia, ranks highest in Gen Z homeownership rates (42.1%), despite a higher-than-average cost burden (38.7%). Toledo, Ohio, also had one of the lowest percentages of cost-burdened Gen Z homeowners (8.6%), down payment-to-income ratios (0.77), and price-to-rent ratios (9.09). Gilbert and Glendale, Arizona, both rank among the top 10 cities, reinforcing the Grand Canyon State as a great state for young homeowners to consider.

In contrast, Honolulu ranks last overall as the least attainable city for Gen Z homeowners, with just 5.8% of Gen Z homeownership and an 87.6% cost burden. The bottom 10 cities comprise seven California cities, with a 100.0% cost-burden rate in Santa Clarita, which suggests extreme financial strain for Gen Z homeowners in this city. Even Austin, Texas, once a hot Gen Z market, ranks low on the list due to rising prices and subsequent down payment-to-income ratios.

Factors That Make a City Favorable for Gen Z Homeownership

Among the four factors that influence Gen Z homeownership nationwide and in individual cities, high homeownership rates are a clear indicator of localized economic advantages. Low cost burdens, down payment-to-income ratios, and price-to-rent ratios also signal lower costs of entry for Gen Z homeowners, especially when transitioning from renting to owning.

In the South and Midwest, moderate cost burdens and lower entry costs foster Gen Z homeownership, compared to pricier cities in the Northeast and West. Cities in California, Oregon, Washington, and other Western states tend to have high down payment-to-income ratios, high cost burdens, and low Gen Z homeownership.

Gen Z Homeownership Rate

Of the top 10 cities for Gen Z homeownership, five have homeownership rates above 20%. The top 3 cities — Chesapeake, Virginia (42.1%), Detroit (37.0%), and Gilbert, Arizona (30.7%) — all had Gen Z homeownership rates over 30%, a rare achievement in today’s high-cost housing market.

Percentage of Cost-Burdened Gen Z Homeowners

Cities where Gen Z homeowners are less likely to spend 30% or more of their income on housing were considered more sustainable long-term — despite a higher national average (36.3%) of cost-burdened Gen Z homeowners. Santa Ana and Chula Vista, California, stood out with 0% of residents considered housing cost-burdened. Glendale, Arizona; Arlington, Texas; and Toledo, Ohio, also stood out with under 10% of Gen Z homeowners considered housing cost-burdened.

Down Payment-to-Income Ratio

Cities with lower down payment requirements relative to income tend to offer faster entry points to homeownership. For instance, Detroit’s 0.55 down payment-to-income ratio indicates Gen Z homeowners must spend just over half their annual income to afford a standard 20% down payment on a typical home on the market. Compare this to Irvine, California, where down payment requirements are 10 times a young homeowner’s income.

Down payment-to-income ratios in Toledo (0.77), Cleveland (0.86), and Indianapolis (0.93) come close to a 1:1 ratio but still rank among the lowest nationwide. Although the ability to save up for a down payment varies greatly among prospective buyers of all ages, a lower down payment-to-income ratio translates to a more achievable savings goal. Regardless of a Gen Zer’s annual income, saving up half of their income is relatively easier than saving up the full amount.

Price-to-Rent Ratio

A low price-to-rent ratio in select U.S. cities suggests that buying a home may be similarly cost-effective to renting — a key decision-making point for many prospective Gen Z homebuyers. Detroit led among the top cities most favorable for homeowners based on its price-to-rent ratio, with home prices just 4.61 times that of rental rates. Cleveland and Baltimore followed at 6.99 and 9.08, respectively, indicating better long-term value for buyers in these cities.

With a price-to-rent ratio of nearly 10 — more than twice that of Detroit — Memphis is still less than a fourth of the 48.41 price-to-rent ratio of Fremont, California, the most favorable city for renters based on significant home prices. Besides two other cities in California (Irvine and San Jose), Seattle and Honolulu rank among the top 5 cities that are more favorable to renters than homeowners based on significantly high price-to-rent ratios.

Buying Tips for First-Time Homebuyers

As for any significant financial or life-changing decision, becoming informed can help prospective first-time homebuyers feel more confident about their purchase. Understanding key concepts — like the value of home warranty coverage — and anticipating next steps can help you make more informed decisions about a home that best suits your budget, needs, and long-term goals. Our comprehensive real estate and mortgage guide includes everything first-time homebuyers need to know to start their journey to homeownership.

First-time homebuyers often gravitate toward fixer-uppers as they tend to be more affordably priced. Evaluating homes based on the cost of repairs needed — including a full roof replacement, installing a new HVAC system, or foundation repairs — can help you budget accordingly. Maximizing your investment by upgrading with energy efficiency in mind can also help you save long-term; for example, the most efficient windows can save you up to $500 a year on household energy bills.

Full Data

Methodology

Today’s Homeowner compared 99 of the largest U.S. cities across four metrics to rank the most and least attainable cities for Generation Z homeownership. We explain these four metrics below and their sources:

• Gen Z homeownership rate. This is the number of young homeowners divided by the total number of young households.
• Percentage of Gen Z renters who are housing cost-burdened. This is the percentage of Gen Z renters spending 30% or more of their pretax income on rent.
• Down payment-to-income ratio. This is a 20% down payment of the typical home value from Zillow divided by the median household income for Gen Z individuals from the census.
• Price-to-rent ratio. This is the typical home value from Zillow divided by the typical annual rent from Zillow. A ratio of 15 or less means a more favorable market for buyers, while a ratio of 21 or more is more favorable for renters.

Data for the Gen Z homeownership rate and cost burden comes from the Census Bureau’s 2023 1-year American Community Survey. Data for the down payment-to-income ratio and price-to-rent ratio comes from Zillow. Some cities were excluded based on data availability.

We used the four metrics above to calculate an average ranking and weighted them equally. The most attainable city scored 100, while the least received a 0.