Survey data consistently shows 65% of Gen Z plans to buy homes in the next five years, with affordability cited as their primary concern. Real estate developers and housing policy experts treat these numbers as reliable signals, building strategies around the assumption that younger generations want homeownership the same way their parents and grandparents did.
That assumption is increasingly hard to support.
Mor Milo, co-founder and CEO of Relli, a PropTech platform connecting accredited investors with commercial real estate syndication opportunities, works extensively with both real estate operators and younger investors.
He has watched the gap between what people tell surveyors and what they actually do with their money widen as financing costs have risen and passive investment alternatives have become more accessible. The evidence shows up in behavior, not surveys: high earners in their 30s and 40s choosing $8,000 monthly rentals over $2 million purchases, younger investors deploying capital into passive real estate syndications rather than buying duplexes, and remote workers prioritizing investment returns over property ownership. The pattern is consistent enough that it can’t be dismissed as an anomaly.
The Math That Changes Everything
For many high-earning younger adults, the numbers no longer favor buying. Milo points to a concrete example: a friend earning $500,000 to $750,000 annually, whose spouse earns another $300,000 to $500,000, rents an $8,000 per month apartment in Long Beach. The equivalent property would cost roughly $2 million to purchase.
At current rates, the monthly mortgage payment on that property would run approximately $12,000 – 50% more than rent for the same living situation. As a financial advisor, the friend calculated that deploying the down payment and monthly savings into passive investments generating 10% to 20% returns made significantly more financial sense.
This isn’t a failure to understand how money works. It’s a clear-eyed reading of a changed market. When mortgages cost 50% more than equivalent rent and investment alternatives offer double-digit returns, homeownership becomes a lifestyle choice rather than a wealth-building strategy. “I think a lot of younger, sophisticated people are looking and seeing that the American Dream of buying a home and having all your equity locked in it is slowly but surely dying,” Milo says.
The Passive Investment Alternative
Younger investors with capital increasingly prefer passive real estate exposure over the responsibilities that come with direct ownership. They want diversification, liquidity options, and returns without tenants calling at 2 a.m. about broken water heaters.
Fractional real estate investing through syndications – pooled investment vehicles where multiple investors fund a single deal – provides exactly this exposure. Instead of deploying $200,000 as a down payment on a single duplex in one neighborhood, investors can spread $200,000 across multiple asset types in different markets, accessing institutional-grade deals that were previously available only to high-net-worth individuals and family offices.
The pattern mirrors what happened with stock investing when platforms like Robinhood enabled fractional share ownership. Younger investors didn’t want to buy entire shares of expensive stocks – they wanted flexible deployment across diversified portfolios. Real estate is moving through the same shift, just a decade later. Milo believes direct homeownership could regain ground if interest rates fall and supply increases, but he is direct about what he currently observes: “In action, I don’t necessarily see the 65% of Gen Z actively chasing home ownership.”
What Surveys Actually Measure
The disconnect between survey responses and actual behavior reveals what questionnaires capture: aspirations and cultural expectations, not genuine intentions.
When someone is asked whether they plan to buy a home in the next five years, most respondents hear a question about whether they value homeownership as a milestone. The answer is usually yes, because ownership remains culturally associated with stability and success. But a question that forces consideration of actual tradeoffs – current prices, interest rates, and available alternatives – would produce different results.
Survey designers often measure aspirations rather than intentions because aspirational data generates more useful headlines. “65% of Gen Z Plans to Buy Homes” is a more familiar story than “Most Young People Prefer Passive Real Estate Investments.” The gap between those two framings is where market participants tend to get misled.
The Supply Problem Nobody Is Solving
The misreading of generational preferences has practical consequences. Developers continue building traditional single-family homes targeting first-time buyers who aren’t showing up in the volumes assumed. Meanwhile, the capital sitting with younger investors remains largely untapped for development purposes.
Milo sees fractional ownership structures as a way to connect both problems. Retail investors gain real estate exposure without requiring a down payment or taking on property management. Operators gain access to a broader capital base. And more development – funded by that capital – adds supply to a market that has been constrained for years. “Operators will have the ability to solicit investment from the average consumer, giving them access to the capital they need to build out supply in the United States,” he explains.
More supply, in turn, would eventually bring prices down enough to make direct homeownership financially competitive again. The current approach – building for buyers who don’t materialize while ignoring the actual preferences of capital-holding younger investors – serves neither side. Developers carry unsold inventory. Younger investors can’t access quality real estate opportunities. Prices stay elevated because supply isn’t growing.
The Lifestyle Choice Reality
Some younger high earners will always choose direct homeownership. They want yards, space for children, or the control that comes with owning the property they live in. Those are real and legitimate reasons to buy.
But treating homeownership as a universal aspiration rather than one option among several misrepresents how financially sophisticated younger adults think about capital deployment. They compare alternatives, weigh financing costs against investment returns, and make decisions based on what the numbers support rather than what the cultural script prescribes.
The generation that came of age during the 2008 financial crisis watched parents lose homes to foreclosure. They entered careers during a period of remote work normalization that taught them the value of location flexibility. They grew up with investment apps making passive diversification accessible. Every formative experience reinforced the same lesson: flexibility has value that ownership does not always match.
“I see them chasing a more lucrative way to create wealth that doesn’t require them to be locked in or locked down,” Milo says.
What This Means for Real Estate Markets
Markets built on assumptions that no longer hold create advantages for those who recognize the gap early.
Developers pivoting toward fractional ownership structures and passive investment vehicles will reach capital that traditional single-family home builders cannot. Operators building systems to engage retail investors will raise capital consistently while competitors wait for institutional money that isn’t returning to equity deals at prior volumes.
The housing affordability problem won’t be solved by building more homes for buyers who don’t exist in projected numbers. It will be addressed by creating investment structures that match how younger capital holders actually want to deploy money – and then using that capital to build supply that eventually drives prices down.
Survey data will continue showing high percentages of Gen Z planning to buy homes. Actual behavior will continue showing those same individuals deploying capital into passive investments. The gap between aspiration and action will persist until market participants start designing products for what people do, not what they say.
About Mor Milo: Mor Milo is Co-founder and CEO of Relli, a PropTech platform connecting accredited investors with commercial real estate syndication opportunities. Connect with Mor on LinkedIn.
Disclaimer: This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.