Gen Z's lifestyle shift is reshaping the U.S. housing market

As housing prices soar and mortgage rates remain high, Generation Z is rethinking what “settling down” means. Rather than rushing into traditional homes, many are leaning toward renting, co-ownership, or smaller, more flexible units.

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The new housing reality: renting, smaller units, co-ownership

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Gen Z’s homeownership rate has plateaued: according to Redfin, just 26.1 percent of Gen Z adults owned homes in 2024—nearly identical to 2023’s 26.3 percent. That stagnation follows years of prior growth, illustrating how current market pressures are reshaping behavior.

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In 2024, Gen Z made up 47 percent of recent renters—more than any other generation—demonstrating a pivot toward renting as stability. (Multifamily Executive, 2025) Meanwhile, many in Gen Z are pursuing creative routes to homeownership. According to National Mortgage News, practices including “house hacking” (renting part of your home) and multi-party purchase arrangements are gaining momentum.

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Why this shift matters

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This isn’t just a trend, it has implications for housing supply, development, and policy. First, demand is tilting toward smaller homes, accessory units, and shared or co-living models. Developers who build flexible, compact units will be better aligned with Gen Z preferences. Second, cities and communities may need to rethink zoning and housing rules—allowing more density, relaxing minimum square footage or parking requirements, or encouraging accessory units. Third, the shift gives renters more political and economic voice. With Gen Z forming a growing share of renters, housing policy changes—like rent protection, flexible zoning, or accessory unit expansion—may gain momentum.

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Timeline & Trends

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• 2024–2025: Multiple reports surfaced showing Gen Z homeownership flattening and rental shares rising (Redfin, 2025; Multifamily Executive, 2025). ‍
• Next 5 years: Expect to see more micro-unit developments, co-living projects, and adaptive housing designs aimed at first-time or flexible buyers. ‍
• Policy watch: Local governments may respond with zoning changes, ADU expansion, or incentives for small homebuilders. Developers who anticipate Gen Z preferences could gain a lead.

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Quick tip: If you’re a developer, investor, or aspiring homeowner, monitor the underserved urban parcels near transit or amenities. Gen Z tends to prefer walkability, flexibility, and lower maintenance. Designing modular units, shared spaces, or smaller footprints could put projects ahead of the curve.

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Xavier Rodriguez is the CEO of ADU Geeks, San Diego’s leading ADU consulting and project management firm. In 2024, the company was ranked No. 1 on the San Diego Business Journal’s Fastest Growing Private Companies list in the Small Business category, achieving 594.3% revenue growth.