Generation Z, which comprises the youngest potential consumers in the housing market, is bullish on homeownership. Freddie Mac researchers conducted a survey of consumers ages 14 to 23 and found they tend to have more positive perceptions of what it means to be a homeowner than millennials did at that same age. Eighty-six percent of Gen Zers say they want to own a home someday.
They also hope to purchase sooner in their lives than millennials did. Gen Z survey respondents say they plan to own a home by the time they turn 30, which is three years younger than the current median age of first-time buyers. The homeownership desires of Gen Z center on having more privacy, control, and independence than renting offers, Freddie Mac’s research shows. They also feel like homeownership is a sign of success, something to be proud of, and provides stability as well as financial security, the survey shows.
“The data show that while members of Gen Z clearly aspire to homeownership, they are realistic about potential barriers,” says Freddie Mac CEO David Brickman. “Although these results are good news for the housing market, they also highlight the challenges many in Gen Z will face as they enter the market to rent or buy.”
Higher home prices and limited inventory, particularly in lower price points, continues to press on many markets across the country. Gen Zers say that saving for a down payment and employment concerns are the biggest barriers to achieving homeownership. “One of the biggest challenges millennials face today is the lack of affordable starter homes,” says Freddie Mac Chief Economist Sam Khater. “Given Gen Z’s desire for suburban medium-sized homes close to urban areas with amenities, demand for entry-level homes will intensify.”
Some additional key findings about Gen Z from the survey:
- They prefer face-to-face. These digital natives surprisingly prefer face-to-face interactions with professionals when they’re ready to purchase a home rather than a fully online process, the survey finds.
- They lack mortgage knowledge. Sixty-five percent of Gen Z respondents say they are not confident in their knowledge of the mortgage process. Seventy-one percent say they will turn to their parents to learn more, while 58% say they’ll talk to a real estate agent.
- They view renting as less appealing. Researchers found that fewer 18-to-23-year-old members of Gen Z view renting as more appealing than buying a home versus millennials at the same age (19% versus 30%, respectively). Gen Z respondents say renting does not make them feel like part of a community, and fewer Gen Zers perceive homeownership to be more expensive than renting.
“It’s clear that many in Gen Z reflect the times in which they have lived,” Brickman says. “They were generally young children during the economic crisis of 2008 but have grown up during a remarkable period of sustained economic growth and prosperity. In general, they are more financially educated and aware than previous generations, and they appear to have a clear understanding of the benefits offered by our nation’s housing market—and some of its challenges.”
Source: realtor.com ~ Image: pixabay.com
