Lexington is among 10 ‘most difficult’ cities in US for Gen Z homebuyers, analysis claims
It’s largely impossible for members of Generation Z, those born between 1997 and 2012, to put down roots in Lexington, a recent analysis of earnings and employment data contends.
Surging interest rates and high home prices combined with stagnant wages have worked against Gen Z and millennial homebuyers. Additionally, while inflation cooled down in late 2023, two years of price increases for basics like groceries have eaten away at the savings of many.
By late 2023, home sales in Central Kentucky had slowed to a trickle. In November, Bluegrass Realtors, an association with members representing 30 counties in the region, reported pending home sales for the month of October dropped to their lowest point since 2014. The association reported just 949 homes under contract that month, marking an 11% dip from 2022.
What’s more, younger generations’ losses have become investors’ gains. In Lexington, opportunistic investors have snapped up housing in recent years, so much so that 235 investors have controlled 1 in every 10 Lexington home sales since 2019, a 2022 Herald-Leader investigation found.
Given all that, it’s no surprise younger Lexington residents are struggling to become homeowners, and the recent analysis from Point2 seems to confirm that. The online real estate company ranked Lexington among the major U.S. cities where it’s most difficult for Gen Z to become homeowners. Here’s why and how Point2 arrived at that conclusion.
What went into Point2’s analysis?
Point2 ranked 100 major cities, including Lexington, based on the following factors:
Home price-to-income ratio
Median sale price difference (between 2023 and 2022)
Home inventory (per 10,000 residents)
Share of homes sold above asking price
Days on market
Homeownership rate
Unemployment rate
According to Point2, “We then used weighted averages of these metrics to calculate where young adults under 25 have the best chances of becoming homeowners.”
The full methodology is available at the bottom of the report.
How did Lexington rank and why?
According to Point2, Lexington is among the top 10 cities in the country where it’s most difficult for Gen Z to get a foot in the door for homeownership.
The company ranked Lexington third from the bottom, placing it alongside much more expensive and populated cities. Two California cities, San Diego and Fremont, ranked second and first, respectively.
“While Fremont and San Diego might not raise any eyebrows, homeownership being so out of reach for young people in Lexington, Ky., just might,” the platform said in its analysis. “[Lexington] ranks third from the bottom, despite being a sought-after area with a median sale price less than the national average. A cocktail of scarce inventory, a high unemployment rate among under-25-year-olds, and median household income not even hitting $25,150 make homeownership difficult to attain for Gen Z.”
The U.S. Census Bureau puts Fayette County’s median household income much higher, however, north of $66,000 in 2022 dollars. In an email to the Herald-Leader, Point2 said that lower figure of $25,150 is based on earnings of those younger than 25.
“We focused on the median household income of Gen Z households – typically lower compared to the general household income, since many are in their early career stages. We used this data in our analysis to better assess Gen Z’s housing affordability challenges by calculating the home price-to-income ratio based on median price and household income where the householder is under 25,” marketing specialist Carmen Rogobete wrote.
Out of the top 10 cities Point2 judged to be the most difficult places for Gen Z to become homeowners, seven are in California, with two in Virginia and New Jersey.
Fremont, Calif.
San Diego, Calif.
Lexington, Ky.
San Jose, Calif.
Riverside, Calif.
Los Angeles, Calif.
Sacramento, Calif.
Chula Vista, Calif.
Richmond, Va.
Newark, N.J.
Expensive to live in Lexington pic.twitter.com/jhkvW5qFvr
— Matt Jones (@KySportsRadio) January 25, 2024
What were the best cities for Gen Z homebuyers?
Generally speaking, Point2 concluded Gen Z’s best options for buying a home lie in major cities throughout the South and Midwest.
It ranked the following cities as the easiest places for Gen Z to become homeowners:
Fort Wayne, Ind.
Corpus Christi, Texas
Detroit, Mich.
Laredo, Texas
Memphis, Tenn.
Lincoln, Neb.
Durham, N.C.
Fort Worth, Texas
Aurora, Colo.
Scottsdale, Ariz.
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