Already Part of the Plan: Gen Z Confident about Buying Homes
Generation Z is upbeat about homeownership, despite keenly understanding the barriers that have held back millennials accomplishing this, according to a Freddie Mac survey.
These teenagers and early twenty somethings are optimistic overall about their financial futures, and most of them estimated being able to buy their first home by the age of 30.
Overwhelming Majority of Gen Z Wants to Own a Home
The survey showed that 86 percent of the roughly 1,500 young people questioned—who ranged from 14 to 23 years of age—want to own a home.
Of this group, about 90 percent said it was somewhat to very likely that they’d buy a home at the median age of 30. That’s three years ahead of the 33-year median age of today’s first-time homebuyer.
Probability of Success Tied to Family’s Financial Circumstances
Understandably, the level of confidence over the question of affordability was highest among Gen Zers in households earning $50,000 or more, and for whom money isn’t a stressful topic. But affordability loomed large for slightly more than a quarter of respondents who said yes when asked whether “owning a home at any point in my life seems out of reach financially,”
Big Hurdles to Overcome
When asked about obstacles they’d face, the oldest cohort of Gen Z (18-23 years), the only part of the group questioned about this, said the top three barriers were:
- High home prices.
- Concerns over job security.
- The ability to raise enough down payment cash.
Gen Z Mixed on Impact of Student Debt
Interestingly, student debt ranked fifth across the entire group surveyed, just below the lack of an established credit history. However, it was cited as a major obstacle for nearly half of respondents who plan to pay for college with a student loan.
While Gen Zers said they’re as likely as younger millennials to own a home someday, the cohort in the 18-23-year range, the only group asked about this, said homeownership is less accessible today than in the recent past.
Suburbia Over City Living
Gen Z across all demographics said they would prefer to buy medium-sized single-family homes in the suburbs. They share other homeownership preferences similar to millennials, such as having reasonable commutes and living in areas with low crime rates. And similar to previous generations, nearly 85 percent or more of survey respondents equated homeownership with success, pride, financial stability and security as well as independence.
Bright Futures Ahead
Members of Gen Z participating in this survey expressed confidence in their futures, and homeownership appears to be part of a broader set of objectives. For example, two thirds of these teenagers and young adults want to pursue college and graduate degrees, and most of them plan to marry and have children, saying they’ll derive happiness as adults from close relationships and enjoyable work.
Read more about Gen Z and other homebuyer populations at Freddie Mac’s Borrower of the Future site. It’s where we bring together research, trends and stories that help mortgage professionals prepare today for tomorrow’s borrowers.
Survey Methodology: This online survey was conducted between July 12–24, 2019, using the Ipsos KnowledgePanel®, a probability-based online panel of Americans. Ipsos conducted an online survey of 1,531 American teenagers and young adults—ages 14 to 23—who are members of the generational cohort known as “Generation Z” (Gen Z). These data were weighted and scaled. The margin of error for the total sample is +/-2.5 percentage points.