In 2020, millennials were among the highest demographic of people looking to buy new homes. With the oldest of this generation turning 40 this year, millennials have started to invest in the real estate market, and their demand for new homes doesn’t appear to be waning anytime soon. But with a global pandemic still on the rise, the real estate industry has had to contend with a shortage of houses that can’t adequately supply the high demand. But things are starting to look up, and slowly but surely, the housing industry is beginning to make a comeback.
But in the post-pandemic scene, millennials might no longer be the biggest buyers on the market. Coming up right behind them is Gen Z, who have also started to show an interest in buying their own homes. Composed of the generation born from 1997 to 2015, the oldest Gen Z’ers have just turned 24. As such, many of them are just finishing up college and may have just entered the job market. But if Gen Z’ers are just starting to find themselves and earn a steady income, how have they suddenly become one of the top homebuyers?
Low Mortgage Rates Lead to More Investments
In January 2021, 30-year mortgage rates dropped to only 2.65%, their lowest rate yet. While the rate has since gone up, going up to the 3% range in April, it has once again decreased and gone back to 2.88% in September of this year. With mortgage rates so low, Gen Z’ers are taking full advantage of it and making the most of their hard-earned wages.
According to a survey conducted by Homes.com, in which they asked over 1,000 Gen Z’ers from the ages of 18 to 24, about 85% of Gen Z’ers plan to buy their own house and go into homeownership early. Most expect to own a home by the time they’re 29. Still, even with such early expectations, 30% of Gen Z’ers expect to save their money for three more years or longer until they can afford a down payment. However, unlike millennials, the down payment is less of a concern for this generation, as most Gen Z’ers are more concerned about making enough income to afford a home.
The Wants and Needs of Gen Z
Unlike the generation that preceded them, Gen Z’ers appear to be approaching homeownership with a broader mind and a more optimistic attitude. Around 82% of Gen Z home buyers want to buy a home to have a place they can call their own, no doubt eager to leave their parents’ homes and move into their own space. Others see it as an investment for their future, a good place for their pets, while others simply feel safer having their own home. Whatever the case, Gen Z’ers have certainly made a grand entrance into the market.
With such high demand and high expectations from this new generation of working adults, it’s no wonder that the real estate industry predicts that Gen Z’ers can bring about a more recent and more significant wave of homeownership in the country. But most Gen Z’ers are not particular about their needs, and their high expectations for a home can be seen as a potential barrier to first-time buyers.
Around 71% of Gen Z’ers want a home close to where they work, 46.3% are concerned about their neighborhood’s crime rate, while 57.9% want to live in a neighborhood or community that’s ethnically and racially diverse. Moreover, Gen Z’ers want real estate agents who understand what they want and personalize their choices to fit their particular needs and reliable mortgage lenders. However, choosing the right real estate agency and loan officers to represent them can quickly amend both. Owing perhaps to the fact that most Gen Z’ers are first-time homeowners, they appear to both want and need more guidance when it comes to choosing a home.
The Next Generation of Homeowners
But the question now is, what does this mean for the future of the real estate industry? As the economy slowly but surely begins to recover, mortgage rates may rise again, although the possibility of the opposite can also be true. Despite that, Gen Z’ers and millennials alike remain optimistic about their homeownership options. While Gen Z’ers are more comfortable saving up until they have enough income to apply for a mortgage loan, no doubt the high percentage of Gen Z’ers looking to fulfill their homeownership dreams in the near future doesn’t precede a decline in the rate of homeownership among this new generation, even after the pandemic.
If anything, homeownership among the younger generation will only continue to grow from here and can even change the face of homeownership altogether, given the many needs and demands Gen Z’ers have on their homes and the kind of neighborhoods they live in.
After the tumultuous events of last year and this year, no doubt the world will forever be changed. As the world starts to adjust to this new normal we’ve found ourselves in, Gen Z can be the saving grace of the future real estate industry. Only time can tell what new heights this generation can achieve, but the future of Gen Z homeownership certainly looks bright.
Meta title; How Gen Z Homeownership Will Change in the Post-pandemic Economy
meta desc: As the oldest Generation Z’ers join the workforce, plenty has started to consider homeownership. But what awaits prospective homeowners in the new normal?