Why Gen Z and Millennials Are Turning to Stocks Instead of Real Estate

For Gen Z and Millennials, the brokerage account is increasingly serving as a flexible substitute for the traditional starter home—not because stocks solve the housing problem, but because they offer liquidity while buyers wait. That shift matters: your down payment may now be exposed to market volatility long before it becomes real estate.

The wealth-building trade-off has changed

The numbers describe a structural change, not a temporary burst of enthusiasm. Fortune reports that the combined stock holdings of Americans under 40 reached $3.09 trillion this year, up 4.5 times since the pandemic. Equities now represent 27% of under-40 households’ net worth, compared with 9% in 1989—the highest share recorded in the Federal Reserve’s tracking.

Housing has moved in the opposite direction. Home prices have risen 235% since January 2000, while less than half of Gen Z and Millennials can currently afford to buy. The average first-time buyer was 28 in 1992. In 2025, that age had reached 40.

The result is predictable. A growing number of younger investors are treating stock portfolios as convertible housing capital. Among Gen Z and Millennials who recently bought a home, one in five sold stocks to fund the down payment, according to a 2025 Redfin survey cited by Fortune. More than half of Millennials also say they are forced to choose between retirement investing and homeownership.

That is not a clean victory for equities. It is a forced allocation decision.

A brokerage account is liquid. A down payment is not

George Eckerd, research director for wealth and markets at the JPMorganChase Institute, told Fortune that stocks and homes remain fundamentally different assets. Stocks are liquid and can be diversified. A house is typically leveraged and concentrated in one property, although it may offer tax advantages.

That distinction is where the risk sits.

If you are investing for retirement, a long holding period can help absorb market drawdowns. If you are investing for a down payment, the timeline is less forgiving. The money may be needed when mortgage rates are attractive, when a suitable property appears, or when a lender requires proof of available funds. The market will not adjust its schedule to match yours.

The same factors can affect both housing and equities, including recessions and interest rates. That creates an uncomfortable correlation risk: the moment you most want to buy a home may also be a period when stocks are under pressure.

The practical question is therefore not whether stocks are “better” than housing. That is marketing language. The question is whether your portfolio’s risk matches the date on which you may need the cash.

If the purchase is distant and uncertain, market exposure may provide flexibility. If the purchase is approaching, the opportunity cost of holding volatile assets rises. A gain can accelerate the deposit. A drawdown can postpone the entire plan.

The new starter asset needs rules

Younger adults are also entering the market earlier. A Charles Schwab survey cited by Fortune found that Gen Z investors start at 19 on average, while Millennials start at 25. Earlier participation can be useful, but only if the account has a defined job.

Do not let one portfolio carry three incompatible mandates: retirement, a home deposit, and general spending. Each objective has a different time horizon and tolerance for losses. Mixing them creates false confidence because the headline balance looks healthy while the actual availability of the money remains uncertain.

The same logic applies to the savings rate. A housing strategy is not only an asset-allocation problem. It is also a cash-flow problem. Cutting recurring expenses can increase the amount available for investing or preserve liquidity when markets fall. Even small budget decisions matter over several years; home workouts and HIIT routines are one example of how some households reduce subscription and commuting costs without abandoning health spending.

We should read the $3.1 trillion figure correctly. It is evidence that younger Americans are building wealth through markets at unprecedented scale. It is not proof that stocks have replaced housing as a risk-free path to security.

Your choice is binary: either define when the money may be needed and reduce portfolio risk as that date approaches, or accept that the market—not your housing plan—will decide the timing.