A newly released report from ServiceLink, a leading provider of tech-enabled mortgage services, indicates that Gen Z remains highly motivated to purchase homes in 2025. However, rising interest rates and soaring home prices could prevent many from finalizing their purchases, as their willingness to tolerate these financial burdens is diminishing.
The annual ServiceLink State of Homebuying Report examines generational trends among recent and prospective homebuyers, offering valuable insights for lenders, servicers, investors, and real estate professionals. This year's findings reveal that while demand for homeownership remains strong --- especially among younger buyers — affordability concerns and evolving expectations for technology-driven transactions are reshaping the market landscape.
Key Findings: Gen Z Ready To Buy, But Willing To Walk Away
- Gen Z leads in homebuying intent: 67% of Gen Z respondents plan to purchase a home in 2025, compared to 51% of millennials, 49% of Gen X, and 22% of baby boomers.
- Affordability remains a challenge: 43% of all respondents considered buying a home in 2024 but ultimately decided against it due to high prices and interest rates.
- Gen Z is most likely to walk away: 58% of Gen Z respondents abandoned the homebuying process in 2024, and 38% were unsuccessful in their attempt to buy a home in the past four years.
Market Sentiment: Optimism Persists, But Rate Sensitivity Increases
- Favorable outlook remains: 41% of all respondents believe 2025 is a good year to buy a home, with Gen Z leading the way at 52%. Only 23% of baby boomers share this optimism.
- Declining tolerance for high interest rates: Gen Z respondents, on average, have a 5.1% mortgage rate but would only accept rates up to 5.8% — down from 6.3% last year. Millennials have similarly lowered their threshold, now willing to accept a maximum rate of 5.5%, down from 6.2% in 2024.
Shifting Generational Trends: Millennials Step Back, Gen X Returns To Market
- Millennials show declining interest: Once the most eager generation, 51% of millennials plan to buy in 2025, down from 59% last year and 61% two years ago.
- Gen X resurges: 49% of Gen X respondents plan to buy this year, a steady rise from 45% in 2024, 25% in 2023, and just 12% in 2022.
- Technology plays a crucial role: 82% of Gen X respondents said they prefer working with lenders who offer digital scheduling for appraisals and closings, and 77% would choose lenders offering virtual closings.
Buyer Preferences: More Space Is The Top Priority
- Size matters: 60% of prospective buyers want a home with more space, a 17% increase from last year.
- Top deal breakers: The biggest deterrents for buyers are small home sizes (51%), high taxes (48%), lack of privacy (43%), and limited outdoor space (33%).
- Gen Z leads in space demands: 66% of Gen Z buyers prioritize larger homes, followed closely by 64% of millennials.
Technology's Expanding Role In Homebuying
- Convenience drives adoption: 59% of respondents cited ease of use as the primary benefit of mortgage technology, followed by time savings (51%) and scheduling flexibility (45%).
- eSigning gains traction: 62% of homebuyers who purchased in the past four years used digital document signing, up from 48% two years ago.
- Baby boomers embrace eSigning: 70% of baby boomers used eSigning, compared to 42% of Gen Z buyers.
- Digital scheduling on the rise: 35% of respondents scheduled their appraisal or closing digitally, with millennials leading the way at 39%.
Home Equity & Refinancing Trends
- Equity is growing: 39% of homeowners report having at least $100,000 in home equity, up from 34% in 2023.
- Refinancing remains an option: 60% of respondents are considering refinancing this year to secure a lower mortgage rate, a slight increase from 57% in 2024.
- Home equity loans remain on the radar: 25% of respondents plan to take out a home equity loan in 2025, though 10% admit they do not know enough about these loans to make a decision.
Implications for Lenders
"These findings show that there is still a strong appetite for homeownership, particularly among the youngest generation, despite the ups and downs of today's market," said Dave Steinmetz, president, origination services at ServiceLink. "Today's buyers need to be armed with information while demonstrating patience and flexibility to achieve their dream of homeownership. For lenders, this provides an opportunity to leverage technology and expand offerings to meet buyer demands. Transparency and education will be key to engaging and supporting the next wave of homebuyers."
As Gen Z and other buyers adapt to shifting market conditions, their evolving expectations will shape the future of real estate transactions. With technology playing a growing role in the homebuying process, lenders and real estate professionals must continue innovating to meet the needs of today's — and tomorrow's — homeowners.
