Millennials routinely make real estate headlines as the now-largest portion of the home-buying population, but it is their younger siblings who are more likely to create generational change in the owner-occupied portion of the real estate market. Although about a third of millennials owned their own home as of the end of 2018, putting them about 9 percentage points below previous generations’ homeownership rates at the same age, Generation (Gen) Z appears to be equipping itself to take the housing market by storm over the next five years.
According to Bank of America’s Homebuyer Insights Report, 59 percent of Gen Zers say they plan to buy in the next five years, which would mean that nearly two-thirds of this generation would own a home before they are 30. Nearly three quarters (71 percent) say they also know exactly what they want in their future homes, and 52 percent are actively saving for that home.
Will Gen Z Intentions Match Their Actions?
Homebuyer sentiment surveys are always a bit difficult to read. What potential homebuyers say they plan to do and what they end up doing do not always match up. For example, 84 percent of millennials say homeownership is a “core component” of the American dream and state they “prioritized it over other life events, like getting married or having children.” However, despite this, in 2018, only about one in 20 believed that home purchase would happen in the next year and about two-thirds said it would be five or more years before they were ready. Only half of this generation, now between 22 and 37 years old, are actively saving for a home at this time
Gen Z seems pretty serious about homeownership, however. In five years, the oldest adult members of this generation will be barely 30, and already more than half of them are saving for their future homes. This may be due, in part, to this generation’s view of traditional stumbling blocks to homeownership like affordability, down payment, and debt as “less of a challenge” than previous generations. Additionally, a third of the adult Gen Z population stated they were “willing to attend a university that would leave them with less student loan debt” if it would enable them to buy a home sooner.
Interestingly, Gen Z views homeownership as a precursor to starting a family. Millennials, on the other hand, while stating they prioritize homeownership over marriage and children, do not appear to be doing so. Nearly 60 percent of Gen Zers said they want to own a home so they can start a family. 41 percent of millennials cited this reason.
“Despite their young age, this group is pragmatic and actively planning for the future,” observed Steve Boland, head of consumer lending at Bank of America. “They recognize buying a home isn’t easy and have a clear vision not only about where they plan to get help, but also how they are willing to help themselves in order to make it happen,” he added optimistically.
Tell us what you think:
- Why don’t more millennials own their own homes?
- Will Gen Z follow through on its expectations for itself when it comes to homeownership?
- In your opinion, is owning a home still a “core component” of the American Dream?
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