CHLA calls for 'moon shot' to boost Gen Z homeownership

A November 2025 National Association of Realtors profile of Home Buyers and Home Sellers concluded that "the typical age of first-time buyers climbed to an all-time high of 40 years." and "The share of first-time home buyers dropped to a record low of 21%."

The President recently issued two Executive Orders [EO on Affordable Housing Construction and EO on Mortgages] to address our homeownership challenges.  And Congress is close to agreement on the "21st Century Road to Housing Act," dozens of provisions dealing with single family and multifamily housing.

These developments are commendable.  But CHLA argues that these are not transformational actions.  Bolder action is needed to address the unprecedented challenges families and individuals in their 20s and 30s face in trying to buy their first home.  What is needed is a Moon Shot Commitment similar to President Kennedy's pledge in 1962 to get to the moon by the end of that decade.

The first step is to listen to Gen Z homebuyers.  To learn about their somewhat unique challenges, strategies, and perspectives.  For this, CHLA has turned to several CHLA members — specifically Veterans United Home Loans, Guild Mortgage, and Homewise — for their informative research on this topic.  

Guild's research found that people in their 20s and 30s still want to own their own home — but challenges are numerous.  High home prices and down payment requirements are the biggest, but many also cite a need for more understanding of the process.

READ MORE: 90% of U.S. markets see uptick in home value

A Veterans United study found that 6 in 10 parents are helping their children buy a home, through down payment assistance, closing cost assistance, or co-signing a loan.  And Homewise data shows the critical importance of down payment assistance and financial literacy and counseling, particularly for underserved borrowers with lower FICO scores of limited down payment capabilities.

So, a week ago Monday CHLA held a Roundtable in Washington D.C. to explore these issues, hearing from realtors and lenders working with Gen Z homebuyers, listening to other stakeholders, and presenting the recommendations from our CHLA white paper.

To address down payment challenges, CHLA suggested looking to the tax code, to make it easier to access the existing tens of trillions of assets held in stocks and 401(k) accounts — either directly by Gen Z homebuyers or by parents or grandparents that want to help their children with a cash down payment.

First the low hanging fruit.  In February, the President rejected proposals for a penalty waiver from a 401(k) for the withdrawal of funds for a first-time home purchase.  His reasons made sense.  It would be costly since individuals would still have to pay taxes. It would also deplete long term savings in 401(k) accounts.

There is a better way to achieve the same objective. Make it easier for an individual to take a loan from their own 401(k) account for a home purchase. Google this option and you will find that most recommend against it, due to the risk you might have to pay the loan back on short notice if you change jobs.  

But just as the rules require you to be able to keep your 401(k) investments in a firm after you leave a job, you should be able to keep a loan for a home purchase in place when you switch jobs.  This removes the main deterrent to using a loan for this purpose. More flexible loan terms should also be allowed.

If we can change the rules to make it easier to invest your 401(k) in crypto, we can do the same for homeownership.  

But we should go bolder. Last fall, CHLA proposed a kind of Starker exchange, in which parents could defer and transfer some of their stock gains when they gift the sale proceeds to their children or grandchildren for a home down payment. With the current capital gains step up at death, many of these assets will never be taxed anyway.  We could also explore targeted tax deferrals, reductions or eliminations of 401(k) withdrawals by parents when they help their children with a down payment on a first home. 

Will this cost money? Of course. But government is about making choices  We have spent $93 billion over the last 13 years on the Artemis project to go to the moon.  Why not a Moon Shot for homeownership?  

CHLA analyzed our current tax code and produced estimates from the Joint Committee on Taxation (JTC), which show that tax benefits for stock investments are almost five times the tax benefits for homeownership – even though they are roughly comparable in asset class and wealth building.  So arguably, we should be doing more for homeownership.

The second major set of Gen Z recommendations in the CHLA White Paper focus on entry level homeownership product types.  We should make condominiums more affordable, through Fannie/Freddie fee reductions and more approvals by FHA and the GSEs of qualified condo projects.  And FHA, Fannie, Freddie, RHS, and VA should get (back) into the business of personal property (chattel) manufactured homes, which constitute the great majority of manufactured home loans.

Perhaps our most intractable homeownership challenges are in high cost areas, like California, the NYC area, and the D.C. area. There is no real justification – since these loans are no riskier than lower balance loans – for Fannie Mae and Freddie Mac to charge much higher loan fees in high cost areas for what are starter homes. Rural areas also have their own distinct homeownership challenges that need to be addressed.

Finally, research shows that more should be done to improve financial literacy, particularly for the home buying and home mortgage process. CHLA has two major recommendations here. First the disparate federal agency web site homebuyer links need an overhaul, with coordination across agencies to develop a unified, practical guide. This guide should then be marketed to Gen Z through social media.

Second, our society should make a greater commitment to financial literacy.  Although the federal government can't make this happen, every high school in America should require two semesters of financial literacy courses.  And we should continue to support federally funded pre-purchase homeownership counseling, to make families and individuals better prepared for the challenges of homeownership.

Big challenges require bold actions.  We owe the next generation the same opportunities the Baby Boomers had to buy a home, build wealth, and enjoy the security of having your own home.