Gen Z gearing up to be homebuyers
The oldest members of Generation Z are setting their sights on home ownership nearly as often as millennials, according to a new survey.
Property Shark, which provides data to real estate professionals, found in a recent survey that 83 percent of Gen Zers born between 1995 and 1999 plan to buy a home in the next five years. The survey defined Gen Z as those born from 1995 to 2010, but it included responses only from Gen Zers 18 or older.
Their aspirations compare to 87 percent of Gen Yers -- also known as millennials -- who expect to own a home in the next five years. Gen Xers are the least likely to buy a home in that time period, according to the survey.
Gen Z's biggest obstacle? Student loans, which hover at a record $1.5 trillion in the U.S. According to the survey, college debt was the top obstacle for both Gen Z and Gen Y. About 32 percent of Gen Z participants surveyed said college debt was their biggest hurdle, compared to 17 percent of millennials and 7 percent of Gen Xers.
About 60 percent of aspiring Gen Z homeowners have their eye on suburbia, while 30 percent are looking to settle down in an urban area. That's in contrast to Gen Y, about 40 percent of whom want to live in a city. More Gen X participants look to the country, with a quarter listing rural areas as their top choice.
For all three groups, the down payment is another top obstacle, with 30 percent of Gen Zers reporting that, 35 percent of Gen Yers and 31 percent of Gen Xers.
"The high numbers of the Instagram Generation who see themselves becoming homeowners in the near future may be attributed to youthful optimism and lack of knowledge, but that's not necessarily the case," according to the survey.
More prone to look for fixer-uppers, about half of Gen Z survey respondents paid less than $10,000 as a down payment, compared to 31 percent for Gen Y and 28 percent for Gen X, the survey found. Just 12 percent invested more than $50,000.
Gravitating toward less expensive homes, about 93 percent of Gen Z buyers saved for less than five years for down payments, though that payment is likely to be supported or subsidized by parents, the survey found. Perhaps because they put less into a down payment, Gen Z buyers get to their savings goal faster than their elders.
The likelihood of owning a home rises 8.4 percentage points if the buyer's parents also own, according to a recent report from the Urban Institute on millennial homeownership.
For millennials, 68 percent had their down payment within five years, and about 25 percent took between five years and 10 years to save up. Gen X buyers tended to save for more than a decade, the survey found.
Property Shark surveyed 2,134 U.S. renters, owners and people living with family. In addition to Gen Z, it grouped the generations this way: Gen X born before 1980 and millennials between 1981 and 1994.
The survey included questions about savings, homeownership and preferences about amenities and community. It also asked for demographic data such as employment and marital status, and it has a 3 percent margin of error.