Saving enough money to purchase a home has always been tough for younger buyers, but rising prices and higher interest rates have made it especially difficult for Gen Z (those born from the mid-to-late 1990s and the early 2010s) to get their foot in the door of the housing market.
As they wait on the sidelines for the chance to buy their first property, many are feeling real estate FOMO, which is the fear that they’re missing out on a major life milestone and the opportunity to build the wealth that others have managed to build. Let’s take a look at some of the obstacles Gen Z is facing and the steps that could help as you save and search for a home.
Table of Contents
- Key Points
- • Gen Z faces major financial barriers to homeownership, including high prices, debt, and rising living costs.
- • Real estate FOMO can trigger poor decisions, such as overspending or buying before you’re ready.
- • Preparation matters, from improving credit to understanding affordability and loan options.
- • Flexibility helps, whether relocating, adjusting expectations, or finding creative ways to save.
- • Sticking to your budget and goals prevents pressure-driven home-buying mistakes.
What Does FOMO Mean?
FOMO, or fear of missing out, is a term used to describe the feeling that you aren’t being included in something others are experiencing. Maybe they’re achieving goals that you haven’t yet reached or doing things that you currently don’t have the resources (financial or otherwise) to do. FOMO is often used to describe missing out on a social event, such as a concert or a party, that you weren’t invited to. But it can also mean wanting things that others in your social circle have, including a better car, clothes, trips, or jewelry.
FOMO spending is when the fear of missing out pushes you to spend money — maybe more than you should — to keep up with your peers. Older generations often refer to this as “keeping up with the Joneses.” Real estate FOMO can have that effect. It might lead someone to buy a house before they’re ready to or to take out a mortgage loan on a house they can’t comfortably afford. But it can also make homebuyers reluctant to commit to a purchase if they think they’ll find a better home at a better price if they just wait a while. And for some Gen Zers, social media can exacerbate those feelings.
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How to Deal With FOMO in Real Estate
There are a few different things you may want to consider if you think FOMO is getting in the way of making smart home-buying decisions.
If You Feel You Need a Reality Check…
It never hurts to revisit your budget to see how much house you can truly afford. Using a home affordability calculator can help you set some limits. It also may be useful to talk to a financial advisor about how buying a home, or a home at a particular price, could affect your other goals. If you see a property you’re interested in purchasing, run the numbers in a mortgage calculator to get a sense of what your monthly payments would be.
If You Find Yourself Trying to “Time the Market”…
It can be tough to predict when home prices or interest rates will go down. Instead, you might want to talk to a real estate agent about the best time of year to look for housing bargains in your area, or you could shift your search from a pricey “hot” area to one with a more affordable cost of living. Also, if you find a home you think you’ll stay in long-term, you may want to keep mortgage refinancing in mind as an option for lowering costs in the future.
If You’re Feeling Triggered by What Others Have…
Looking at too many listings, home improvement shows, or friends’ house-proud social media posts may not help you understand the market you’re looking at and could lead you away from your personal must-haves. When that happens, it helps to take a break (perhaps from social media) to reprioritize and get back on track.
What Are the Barriers for Gen Z Home Buyers?
Some of the obstacles Gen Z homebuyers face are the same ones that would-be homeowners have encountered off and on for generations. Home prices are high and continuing to rise. Housing inventory is growing slowly but needs to outpace demand to limit price increases. And though mortgage interest rates are cooling and inflation is remaining steadily lower after the post-pandemic spike, gas, groceries, and other costs are still taking a toll on household budgets.,
However, Gen Z has bigger issues to contend with than previous generations, including:
Down Payment Costs
Down payments are calculated as a percentage of the home price, so higher-priced houses usually require larger down payments, making it increasingly difficult to get into the housing market. First-time homebuyers typically put down less than repeat buyers — about 10% compared to 23%, according to the National Association of Realtors. That could still be a hefty amount to come up with, considering that in February 2026, the median home price in the U.S. was nearly $430,000.
Student Loan Debt
A college education may help Gen Z graduates earn higher salaries, but many report that student debt is slowing their progress toward certain milestones, including buying a home. Those college loans can make it even more difficult for younger buyers to save for a down payment or make higher monthly mortgage payments. You can afford a mortgage if you have student loans, but student debt can factor into your debt-to-income ratio (DTI), which may affect whether or not you qualify for a mortgage and the interest rate you’re offered.
Higher Rent Payments
Rising rental costs are another factor that may be affecting Gen Z’s ability to save for a home. According to Zillow’s monthly Observed Rent Index, the typical U.S. rent in January 2026 was $1,895, a 1.9% year-on-year increase.
Adulting = Insecurity
Navigating life after college with a new (or new-ish) career, bills to pay, and uncertainty about where life might take you next (a new job, a new town, a new partner, a new baby?) can be daunting enough without the home-buying headaches. While some Gen Zers have found a way into the housing market despite the barriers, others are waiting until their careers and finances feel more stable.
How Does Gen Z Approach Home Buying?
Although buying a home may not be as significantly linked to achieving success as it was for older generations. According to a 2025 Realtor.com survey, 67% of Gen Z respondents said that they see homeownership as an important lifetime goal, and 69% agree that real estate is an opportunity to generate wealth. And they are finding ways to make it happen. By cobuying with friends, moving to a state with a lower cost of living, using cash gifts from family, or living with their parents after college to save money, Gen Zers are entering the housing market.
Where Is Gen Z Buying Homes?
As you might expect, Gen Zers who live in, or are willing to move to, more affordable locations, such as the South and Midwest, are more likely to buy homes than those looking to live in upmarket coastal cities that carry higher price tags.
In March 2025, Realtor.com listed Des Moines, IA, Omaha, NE, Youngstown, OH, Dayton, OH, Grand Rapids, MI, Little Rock, AR, Birmingham, AL, Cincinnati, MS, Jackson, MS, and Wichita, KS, as the 10 metropolitan areas with the largest percentage of Gen Z buyers. As per Redfin, in February 2026, median house prices in these cities ranged from $134,500 to $285,000, well below the U.S. median of $429,708.
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Is It Harder for Gen Z to Buy a House?
Gen Zers aren’t facing the double-digit mortgage rates their parents and grandparents faced in the early 1980s. Nor are they trying to buy homes during a depression or a recession. Still, thanks to inflation, low inventory (partly caused by affordable homes being snapped up by investment companies), and other factors, this is a challenging time to become a homeowner.
According to Redfin, 38.3% of 28-year-olds owned their home in 2025. That homeownership rate is lower than that of Gen Xers (42.5%) and baby boomers (32%) when they were 28. But it’s a bit higher than the rate of 36.8% for millennials when they were the same age.
Steps for Gen Z Home Buyers to Consider
For Gen Z, patience, flexibility, and creativity may be the keys to success in today’s tough housing market. Here are some steps to consider as you pursue homeownership:
Know Before You Go
The more you know about the home-buying process, the more confident you can feel about the decisions you make. Get to know the first steps you should take (such as improving your credit score, lowering your DTI ratio, and researching first-time homebuyer programs and loans). And as you start your home search, consider listing your wants vs. your needs, learning about the different types of mortgage loans, and completing the mortgage preapproval process.
Keep Expectations in Check
Here’s where FOMO can really get in your way: The house you can afford may not be anything close to the designer houses you see on social media and TV. But an affordable starter home can be a stepping stone to the home of your dreams. If you aren’t sure what you can manage, talk to a professional, such as your financial advisor, a real estate agent, or a mortgage professional.
Cast a Wide Net
If you can’t afford the trendiest neighborhood or a house directly on the beach, you may want to try searching in similar or nearby areas. If you can relocate, you could broaden your search, looking at states that have what you want but at a lower price.
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The Takeaway
If high housing costs and other factors are getting in the way of your plans to buy a home, and you feel a strong sense of FOMO creeping up on you, try not to get sucked into overspending or abandoning homeownership altogether. Staying true to your budget and goals and getting some assistance in finding the right home and home loan can help you avoid feeling pressured into making bad decisions.
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FAQ
What does FOMO mean in real estate?
The fear of missing out (FOMO) in real estate is the worry that you aren’t where you should be when it comes to homeownership. It may be because you haven’t yet purchased a home, or you notice differences between your home and the places you see others in your peer group moving into.
Which housing markets are dropping the fastest?
According to Cotality’s U.S. Home Price Insights report from February 2026, Florida’s Cape Coral, Lakeland, North Port, Palm Bay, and West Palm Beach are likely to experience price drops this year. The most affordable areas are Johnstown, PA, Albany, GA, Decatur, IL, Joplin, MO, and Weirton, WV.
What is the slowest month for the housing market?
Winter is typically the slowest time of year for the housing market, while spring and summer are the busiest seasons. Cold weather, the holiday season, and the start of the school year often see fewer home listings and fewer people attending showings, contributing to the seasonal slowdown.
How can Gen Z save for a down payment faster?
Strategies for faster saving include setting up automated savings deposits, keeping your savings in a high-yield account, taking on a side hustle, and reducing expenses by living with parents or roommates. As down payments are calculated as a percentage of the sale price, moving to an area with lower house prices can mean that you reach the amount you need faster.
Should I wait to buy a home if prices are high?
Timing the market is difficult. Focusing on your personal finances, affordability, and long-term goals is usually a safer approach than waiting for prices to drop.
Photo credit: iStock/gradyreese
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