Despite stagnate wages, soaring home prices, and mounting student debt—Gen Z is breaking into the regional housing market in a big way, according to a new report from LendingTree.

Gen Zers—those born between 1995 and 2005—made up more than 20% of mortgage requests last year in regional cities like Salt Lake City, Oklahoma City, Birmingham, Indianapolis, Cincinnati, and Louisville, the report found.

To combat an average post-graduate salary of $55,260 and a median home price in the U.S. of $422,000—Gen Z buyers are looking at putting roots down in smaller, more affordable cities.

"Though the average mortgage amount in Salt Lake City is higher than in many of the nation's other large metros, it's a hot spot for younger homebuyers, likely owing to—among other factors—its strong jobs market and a good blend of urban and rural amenities," said Jacob Channel, the author of the LendingTree report.

In the country's more expensive cities—San Francisco, New York, and Los Angeles—Gen Z made up less than 10% of mortgage requests.

"Homeownership, renting, housing arrangements—these things are obviously tied to finances, they're tied to career opportunities, they're tied to inflation," said Pamela Aronson, a sociology professor at the University of Michigan-Dearborn. "All of those things are impacting what Gen Z is able to do."

Real estate headwinds

Home prices have far outpaced wage growth over the last decade, making it harder for first-time buyers to secure a home.

According to the Federal Finance Housing Agency, home prices rose 74% from 2010 to 2022—while the average wage only rose 54% during that time.

Making matters more complicated for Gen Z buyers is that baby boomers—those aged 58-76—made up 39% of home buyers in 2022, are driving up real estate prices with all-cash offers and are downsizing to what would be considered a first-time buyer's home.

"Student debt and high interest rates have prevented some people from making the step to own property," said David Howard, CEO of the National Rental Home Council.

On top of that, recent reports indicate that Gen Z has accumulated $55 billion in credit card debt—higher than any other generation.

The starter home

But what about starter homes—an entry point into the real estate market that baby boomers and Gen X buyers have historically used to purchase property?

Now, the idea of a starter home is virtually a non-starter for Gen Z and Millennial home buyers.

Nearly 40% of Americans between the ages of 25 and 44 who bought homes last year plan to stay in them for 16 years or more, according to data from the National Association of Realtors.

For homebuyers between the ages of 18 and 24, that number jumps to 48%.

This sentiment may be fueling the delay in homeownership for both Millennials and Gen Z buyers.

Even if Gen Zers were interested in a starter home, they're becoming harder and harder to find. Just about 11% of homes sold in the first quarter of 2023 were priced below $300,000, according to the U.S. Census data.