Homeownership is a daunting but desirable goal for many young Americans, yet many struggle to afford housing. In a survey from Redfin earlier this fall, 40% of millennials and Gen Z renters stopped dining out so they could afford their rent.
The 30-year fixed-rate mortgage (FRM) has remained steady for weeks, and currently sits at an average 6.3%—below recent highs and in-line with long-run historical averages. But it’s not enough to dispel young homeowners’ and buyers’ fears for the housing market and the future of homeownership.
A recent survey conducted by Realtor.com® reveals that 82% of Gen Z homeowners—or those who hope to own a home—believe that buying a home is harder for their generation compared to previous ones.
The survey uses a sample of 1,000 Gen Z Americans from ages 18 to 27. The respondents were surveyed from Oct. 4 to Oct. 7, and each of them indicated that they plan to own a home.
The report states that 16% of Gen Z put housing affordability as one of their highest concerns in life. Despite their qualms and fears about affordability, the report found that the majority of Gen Z homeowners and buyers greatly value homeownership.
About 67% of respondents said that homeownership is a somewhat or very important lifetime goal for them, and 69% agreed that real estate is an opportunity to generate wealth. A slight majority (51%) of Gen Zers see it as a somewhat or important aspect of the American Dream.
Danielle Hale—Realtor.com’s chief economist—stated that, “Gen Z has grown up during a time of rapid change in the housing market, and they’re approaching homeownership with clear eyes.”
While Gen Zers have had less time to accumulate wealth compared to their older counterparts, a divide between their readiness for homeownership and their financial situation remains. About 46% feel at least somewhat ready to buy a house, but only 36% think that they are somewhat financially ready to buy one.
On the road to achieving homeownership, the report states that 49.5% of Gen Z respondents put “advancing in their career” first, in terms of milestones. Buying a house follows in second place, while marriage and having children ranked third and fourth, respectively.
The report found few gender divides for Gen Z homeowners and buyers. But more Gen Z women wanted to advance their career first (52%) than their male counterparts (45%). Also, 23.7% of men put buying a home as their first milestone, slightly more than women at 19.4%. The report notes that both Gen Z men and women were equally likely to say that they’re prioritizing marriage before buying a house.
As buying a home is a high threshold to reach, about a third of the respondents reported that they’ve already started saving for a down payment. On average, respondents estimated that they would need $54,546 for a down payment. This is far more than the average down payment of $30,250, according to the report. But it is much less than 20% of the national median list price of $85,000 for a home listed at $425,000.
The report found that—to save for their down payment—89% of respondents were willing to take on an additional job or side hustle (or already have one). Further, 86% were willing to move or have already moved into more affordable housing; 79% would or have already changed where they worked; and 73% would ask for or already have asked for a raise at their jobs.
Although fewer were willing to take on a roommate (64%), even fewer would borrow or have borrowed from their parents (59%). Only a slight majority (52%) of Gen Z homeowners and buyers would or have already made risky stock market or crypto investments.
In terms of value, about a third of Gen Z respondents said that price was the most important aspect. While 18.5% of respondents said the size was most important, 17.9% said the location was the most important. But, the report notes that respondents were “realistic” in their expectations, with 44.5% of them saying that they wanted a three-bedroom house.
Despite the challenges they face, Gen Z buyers are readying themselves for homeownership and seem to be making conscious financial decisions.
“They know affordability is a major hurdle, but they’re not giving up on the dream of owning a home,” Hale said. “Instead, they’re adapting, focusing on career growth, saving early and being realistic about what they can afford. That determination and flexibility will serve them well as the market evolves.”
For the full report, click here.
