60% of Gen Z Worry They’ll Never Afford a Home
Six out of 10 Gen Zers worry they might never become homeowners.
That’s according to a survey by Clever Real Estate, which highlights the biggest barriers to homeownership for Gen Z as well as their top concerns and priorities.
Because while 92% of Gen Z respondents say owning a home is important to them, 96% prioritize other goals over homeownership, including stable employment, building a career, and starting a family.
Just 18% of prospective Gen Z homebuyers believe they can afford a home. And 33% of Gen Z homeowners have struggled to pay their mortgage.
There is such a thing as sacrificing too much to become a homeowner. And with 21% of Gen Z homeowners saying they didn’t have sufficient knowledge of the homebuying process, it’s painfully clear too many agents out there are dropping the ball when it comes to educating their buyer clients and working on their behalf.
Read on for some more highlights of the survey to gain a better understanding of how to help Gen Zers achieve homeownership sustainably—and at the right time for them.
NEARLY 1 IN 5 GEN ZERS HAVE $0 IN SAVINGS
The struggle to save for a down payment—while paying rent as well as other living expenses—is a significant barrier to homeownership for the majority of Zoomer non-homeowners in the survey.
Compared to just 25% of Millennials, about 63% of Gen Z non-homeowners have less than $10,000 in savings. Also, 17% of Zoomers have $0 saved, compared to 5% of Millennials.
Given that, it will take Gen Z prospective buyers far longer than Millennials to collect enough for a down payment—which, of course, grows larger as home prices continue to increase (assuming the buyer sticks with the same down payment percentage).
The median-priced home today costs roughly six times the median U.S. salary. According to Clever Real Estate’s report, that means the average homebuyer would need to save for about six years to put away enough for a 20% down payment.
But with 69% of Zoomer non-homeowners planning to save for fewer than six years, a large share of them will approach a home purchase with less than a 20% down payment saved up.
HOW GEN Z HOMEOWNERS VIEW HOMEBUYING PROSPECTS OF THEIR GENERATION
More than three-quarters (79%) of Zoomer homeowners don’t think the average Gen Zer can afford a home.
Also, among these homeowners, 33% say they received financial assistance from their parents to put toward their down payment, while 31% say they moved in with their parents to save for a home purchase.
Not all Gen Z homeowners are in a good place financially since making their home purchase. One in three (33%) have struggled to pay their mortgage. And two-thirds of them (68%) expressed regrets about their home purchase:
- 21% say they “didn’t have sufficient knowledge about the homebuying process”
- 38% admitted to getting their homebuying information from TikTok
- 15% of those say the advice they received from TikTok/social media was bad
Other common regrets included—
- Buying with a high interest rate (17%)
- Buying a fixer-upper (13%)
- Buying too young (13%)
- A lack of young people in their neighborhood (13%)
- Taking on an expensive mortgage (13%)
96% OF GEN Z PRIORITIZE OTHER GOALS OVER HOMEOWNERSHIP
While homeownership is important to 92% of the Zoomers in the survey, 96% have goals that are more important to them than buying a home, including:
- Stable employment (51%)
- Building my career (48%)
- Building my emergency savings (34%)
- Starting a family (32%)
- Getting married (32%)
- Traveling the world (29%)
- Buying/paying off a car (27%)
- Building my retirement savings (25%)
- Investing (23%)
- Paying off credit card debt (22%)
- Paying off student loans (21%)
- Having an exciting social life (19%)
- Adopting a pet (14%)
- Becoming a social media influencer (7%)
GEN Z RENTERS ON FINANCIAL STRUGGLES AND STUBBORN OPTIMISM
A majority of Gen Z renters have struggled to pay their rent, with 18% citing financial irresponsibility as a barrier to buying a home. More than one-third (35%) say they’re concerned about qualifying for a mortgage.
In spite of those barriers and concerns, 90% of Gen Z prospective homebuyers believe they’ll buy a home before they turn 35 (the current average age for homeownership in the U.S.).
One-third (33%) even say they expect to be homeowners by the age of 25.
More than half (52%) expect their first home will cost under $250,000, and 29% expect to someday own a home worth over $1 million.
Key Details:
Based on a new survey by Clever Real Estate, 60% of Gen Zers worry they might never be able to buy a home of their own.
The primary barriers to homeownership cited in the survey include the high cost of homes (50%) and high interest rates (31%).
The cost of the down payment is another significant hurdle, as currently 61% of Gen Z non-homeowners have less than $10,000 in savings (20% of $50,000).
Posted by Sarah Lentz | Jul 19, 2024 | Housing Market
https://nowbam.com/60-of-gen-z-worry-theyll-never-afford-a-home/
@ChuckBarberini - #ChuckBarberiniRealEstate - @ChuckBarberiniRealEstate
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