Gen Z, teenagers, and young adults ages 14 to 23 expect to attain the goal of homeownership by age 30, three years younger than the current median homebuying age of 33.
This group’s view is more positive than millennials of the same age, with 86 percent wanting to own a home someday, according to a new survey from Freddie Mac.
“The data shows that while members of Gen Z clearly aspire to homeownership, they are realistic about potential barriers and understand the potential benefits of renting,” said David Brickman, CEO, Freddie Mac.
“Although these results are good news for the housing markets, they also highlight the challenges many in Gen Z will face as they enter the market to rent or buy.”
The obstacles the Gen Z group cites include a number of obstacles to homeownership:
• Home prices (92%)
• Saving for a down payment (82%)
• Unstable job or job change (68%)
And for Gen Z members who plan to pay for college, 54 percent say student debt is a major obstacle.
Perhaps surprisingly, when this digital generation is ready to buy a first home, a significant majority, 79 percent, would rather have in-person connections with professionals than use an online process.
The desire for face-to-face guidance may result from survey findings that although today’s 14- to 23-year-olds are financially educated, 65 percent report lacking knowledge of the mortgage process.
To learn more about homebuying, 71 percent would consult with a parent, 58 percent with a real estate agent, 54 percent with the Internet, 45 percent with family and/or friends, and 41 percent with a bank or mortgage lender.
The Freddie Mac survey of 1,531 people aged 14 to 23 shows this generation has clear preferences for the type and location of the home they buy.
Data indicates that 77 percent of Generation Z homeowners would choose to live in a single-family home and 59 percent say their ideal home would be medium-sized.
As for location, 35 percent would choose to live in a suburb of a big or medium-sized city, with another 30 percent wanting to live in a rural area or small town.
Freddie Mac also says that fewer 18- to 23-year-olds think renting is more appealing than buying a home compared to millennials when they were the same age – 19 percent vs. 30 percent. Only 33 percent believe renting makes you feel like part of a community, compared to 39 percent of millennials at the same age. And only 40 percent think it costs less to rent than own, compared to 51 percent of millennials.
“One of the biggest challenges millennials face today is the lack of affordable starter homes,” said Sam Khater, Freddie Mac’s Chief Economist. “Given Gen Z’s desire for suburban medium-sized homes close to urban areas with amenities, demand for entry-level homes will intensify.”
For the full report see freddiemac.com/research/consumer-research/20191120_gen_z_ambitious_yet_realistic.page.
By Tom Kalinski. Tom is the broker/owner of RE/MAX of Boulder, the local residential real estate company he established in 1977. He was inducted into Boulder County’s Business Hall of Fame in 2016 and has a 40-year background in commercial and residential real estate. For questions, e-mail Tom at [email protected], call 303.441.5620 or visit boulderco.com.