Gen Z Shifts to Stocks Amid Worsening U.S. Housing Affordability Crisis

This analysis is based on a 2025-12-02 discussion from “The Big Money Show” panel [4], which explored a significant shift in Gen Z’s financial behavior. The U.S. housing market faces a deep affordability crisis: median home prices have risen 36% since 2020, reaching $417,100 (Q3 2025) and $435,300 annually [1][2]. Only 38% of U.S. households now have the income to afford a home (down from 57% in 2020), while the share of first-time buyers has fallen to a historic low of 21% with an average age of 40 [1].

The crisis is fueled by chronic supply shortages (construction labor crunches, restrictive regulations) and homeowners “locking in” low pandemic mortgage rates (reducing inventory turnover) [0][1]. In contrast, stock market investing has become highly accessible due to commission-free trading apps and low minimum investment requirements [3]. Gen Z’s lack of first-hand bear market experience has also contributed to a perception of low investment risk, reinforced by the market’s quick rebound from a 2025 dip [3]. This trend reverses the traditional U.S. wealth-building path, where homeownership historically accounted for nearly half of household wealth [3].

1. Paradigm Shift in Wealth Building
   : Gen Z is abandoning homeownership as the cornerstone of wealth accumulation, with financial assets now representing a larger share of their wealth profile—reversing decades of U.S. financial tradition [3].
2. Self-Reinforcing Housing Crisis
   : The “locked-in” mortgage rate phenomenon exacerbates both housing supply shortages and affordability, creating a cycle that makes homeownership increasingly out of reach for young Americans [1].
3. Volatility Risk from Inexperienced Participation
   : Gen Z’s growing stock market presence (33% of 25-year-olds have investment accounts, a sixfold increase from 2015 [3]) could amplify market volatility if a prolonged bear market occurs, as this cohort lacks historical context for such downturns [3].

• Stock Market Risks
  : Increased retail participation by Gen Z may lead to higher volatility and potential valuation inflation in sectors popular with younger investors, such as technology [0][3].
• Housing Market Risks
  : Lower first-time buyer demand could slow home price growth, but locked-in homeowners will likely continue reducing inventory turnover, prolonging supply shortages [1].
• Wealth Inequality Risks
  : If homeownership remains inaccessible, Gen Z may miss out on housing equity gains—historically a key driver of U.S. household net worth growth (29% increase between 2019-2022) [3].

• Housing Metrics
  : 38% household affordability rate (2025 Q3), $417,100 median home price (2025 Q3), 21% first-time buyer share (historic low), 40 years average first-time buyer age (record high) [1].
• Gen Z Investing
  : ~33% of 25-year-olds with investment accounts (sixfold increase from 2015), driven by accessible trading platforms and housing affordability barriers [3].
• Crisis Drivers
  : Chronic supply shortages, locked-in mortgage rates reducing inventory, elevated home prices [0][1].