Gen Z leads all generations in willingness to cut spending and downsize to buy homes

# Overview Cotality's Consumer Sentiment Report shows Gen Z homebuyers are making bigger affordability trade-offs than older generations to reach ownership. The report surveyed buyers across the US, Canada, the UK, Australia, and New Zealand and finds a cohort entering the market with recalibrated expectations after years of elevated housing costs.

# What the data says

• 78% of Gen Z respondents said they are prepared to reduce discretionary expenses (dining, travel, retail) to become homeowners. That edges out Millennials at 77% and far exceeds Baby Boomers at 50%.

• Across all generations, 65% would seek a smaller mortgage to improve affordability, and 69% had already cut or planned to cut lifestyle spending.

Cotality chief economist Selma Hepp frames this as the result of Gen Z growing up with persistently higher housing costs. She says Gen Z is more willing to adjust budgets, reduce discretionary spending, or consider smaller homes if that means owning sooner.

# How intent shows up in the market Mortgage Professional America's analysis cited in the report links the sentiment to actual mortgage activity: as of Q2 2026 Gen Z made up one in five rate locks and nearly a third of first-time homebuyer loans. That indicates the willingness to compromise is moving beyond survey responses into real transactions.

# Global comparison The U.S. sits near the global median across Cotality's measures. Geographic differences include:

• Canada registered the highest openness to downsizing at 68%.
• Australia led on willingness to cut lifestyle spending at 75%.

These comparisons show cultural and market differences in how buyers weigh trade-offs, with Gen Z consistently more ready than older cohorts across the surveyed countries.

# Financial framing Cotality provides

# Market implications Younger buyers' flexibility changes what transactions might look like: smaller properties, tighter budgets, and sensitivity to mortgage rates. Analysts cited in the report point to stabilizing rate expectations and growing inventory in 2026 as factors that could strengthen Gen Z's buying position further. That implies lenders, agents, and builders may see more first-time purchases in segments suited to smaller homes and affordability-focused financing.

# Bottom line Gen Z's higher tolerance for financial trade-offs is measurable in both survey responses and mortgage activity. The generation is cutting discretionary spending and accepting smaller homes to reach ownership, and that behavioral pattern is shaping first-time buyer volume in mid-2026.