Younger homebuyers turn to social media, AI and each other

Faced with high housing costs, economic instability and declining trust in traditional lending institutions, younger generations are redefining how they approach homeownership.

A newly released NextGen Homebuyer Report — compiled by National Mortgage Insurance and financial literacy nonprofit FirstHome IQ — highlights how Gen Z and millennials are creatively navigating a changing real estate landscape.

Since 2020, the annual report has tracked the evolving attitudes and behaviors of homebuyers ages 18 to 44. The 2025 edition draws from a survey of 1,000 respondents across Gen Z (ages 18 to 24), younger millennials (25 to 34) and older millennials (35 to 44).

The sample was balanced across gender, race and income to reflect the diversity of today’s housing market.

Affordability challenges drive innovation

Nearly 69% of respondents cite affordability and the high cost of living as primary obstacles to buying a home, with many turning to alternative strategies.

These include co-buying with friends or family (21%), investing in fixer-uppers (42%) or “house hacking” — renting part of their home to generate income (19%).

Gen Z, in particular, shows a greater willingness to pursue nontraditional paths. According to the report, Gen Z is embracing alternative strategies more enthusiastically than their millennial counterparts, with a much higher likelihood of considering co-buying (32% versus 18% for millennials).

Gen Z respondents are also more inclined to rent out portions of their homes (23% versus 17%) and slightly more likely to move to lower-cost areas (41% versus 38%).”

“These trends highlight how high costs of living and housing affordability challenges are forcing NextGen buyers to get creative, moving away from traditional solo homebuying toward collaborative approaches and income-generating property strategies,” the report explained.

“This shift reflects both necessity and a pragmatic adaptation to current market conditions, with younger buyers finding innovative ways to achieve homeownership despite significant financial barriers.”

Trust in traditional institutions crumbling

Maybe the most sobering conclusion of the report is the erosion of trust in financial professionals and institutions. Only 40% of respondents said they trust banks — a sharp drop from 61.5% in 2024. Trust in loan officers has plunged even further, down to 19.5%.

The roots of this distrust are complex. Millennials and Gen Z grew up during the 2008 financial crisis and the COVID-19 pandemic, periods of persistent economic turbulence. Many have seen firsthand the consequences of systemic failure and inequality, the report explained.

Only 20% of respondents now trust loan officers to guide them through mortgage decisions, while only 33% believe that real estate agents provide reliable advice.

Instead, these buyers are increasingly relying on peer communities, social media and artificial intelligence (AI)-powered tools for support.

Digital-first generation turns to AI

With 35% of all respondents — including 43% of Gen Z — using tools like ChatGPT for homebuying information, AI is becoming a critical part of the decision-making process.

AI offers a more accessible, personalized experience compared to traditional sources. The report suggests that this technology “cuts through information noise, providing targeted, digestible guidance that simplifies complex financial decisions.”

YouTube has also emerged as the leading educational tool, used by 66% of respondents, followed by online webinars (42%) and podcasts (35%). Social media is now a standard part of the research phase that’s used by 40% of Gen Z and 30% of millennials.

Financial stress, confidence still factors

Although financial stress has lessened slightly — with 26% of those surveyed saying they feel “very stressed,” compared to 33% last year — more than two-thirds still experience some level of financial strain. The top reported stressors are high living expenses (63%) and unexpected costs (42%).

Financial confidence remains an issue — particularly for Gen Z — with only 43% feeling confident in their financial knowledge. Confidence is lower among women (38%) compared to men (47%).

More than half (53%) of all respondents said they never received personal finance education in school. Another 29% said it was optional or limited to a brief lesson.

Who to turn to?

Real estate agents remain the first point of contact for many millennial buyers (43%).

But Gen Z is more likely to turn to financial advisers (36%) — a notable shift from millennials (25%). Mortgage brokers are the least likely source for an initial contact from either group.

The report concludes that housing professionals have both a challenge and an opportunity.

“Rebuilding trust will require unprecedented levels of transparency, personalized communication, and commitment to the financial wellbeing of NextGen buyers,” it stated. “The path forward demands more than marketing — it requires a fundamental realignment of professional practices to meet the expectations of a generation that values authenticity, accessibility, and genuine financial empowerment.”