Generation Z Spending Habits
Eighty-six percent of Generation Z want to own a home someday, considering that homeownership is critical to achieving the American Dream. Obstacles to homeownership include home prices (92%), saving for a down payment (82%), and job change (68%). Student debt is considered a major obstacle, accounting for 54%, only for Generation Zers paying for college.
Views of Homeownership
- Generation Zers consider homeownership as one of their most important goals. They have "strong, positive views of homeownership, and the overwhelming majority (86%) want to own a home someday."
- Generation Z self-estimates that they will purchase a home for the first time when they turn 30 years old. Besides, the current median age for first-time home buying in the United States is 33 years old.
- Views of homeownership for Generation Z:
- Make them proud: 93%
- Sign of success: 86%
- Something that provides privacy: 93%
- Providing independence and control: 88%
- Generation Z's homeownership rate is 85.8%, while the national rate is 64.2%.
- The top reasons behind buying a home decision are "starting a family (59%), building wealth over time (47%), and making their family proud (33%)."
Homeownership and Renting
- Eighty-two percent of Generation Z "believe that homeownership is critical to achieving the American Dream, while 97% believe they will someday own a home, according to data from the National Association of Realtors."
- Generation Zers are growing in an epoch where "renting is historically unaffordable, and the housing market is markedly stable."
- Nineteen percent of Generation Z consider renting as a more appealing choice than buying a home, while 30% of Millennials view renting as a more appealing choice.
- Up to 33% of Generation Z reported that renting makes them feel like part of a community, compared to 39% of Millennials.
- Similarly, about 40% of Generation Z (as compared to 51% of Millennials) are convinced that a rented home will cost less than a bought one.
- This generation is less enthusiastic about rented homes than their precedent generation, Millennials. However, they admit that renting has some positive aspects as follows:
Obstacles to Homeownership
- According to Generation Z, obstacles to homeownership are the following:
- Student debt is considered a major obstacle, accounting for 54%, only for Generation Zers paying for college.
- Other obstacles include hefty down payments, heavy loans, and credit card debt.
- Forty-six percent of Generation Zers that have high amounts of student debts to pay is feeling exhausted by these debts.
- On the other side, for 45% of the generation, student loan debt doesn't represent an obstacle to buying a home. "By comparison, 27% see it as a minor obstacle and another 27% as a major obstacle."
- However, four out of five Generation Zers are still planning to buy a home in the next five years, despite their massive student debt. Despite the fact that 55% of Generation Z have student loans totaling $25,000 or less, they are currently saving to buy their own home.
Spending on Home Buying
- Fifty-two percent of Generation Z said they are saving money for home buying.
- During the home buying process, Generation Z, a deal seeker generation, is more likely to look for saving money, opting for affordable, functional homes.
- They will compromise "on almost anything as long as it cuts costs," except space: They don’t care about amenities, they are willing to buy a fixer-upper, "they saved for less than five years before buying their homes," they buy homes despite student loan debt.
- Generation Z's ideal home is a 2,081 square foot home. In fact, they only afford to buy an 803 square foot home.
- Twenty-one percent of them will receive financial help from their parents.
Home Buying Process
- The top motivators for buying a home are the following:
- Seeking more privacy: 45%
- Build equity and wealth: 44%
- Life events such as getting married: 24%
- Expanding their family: 23%
- Seventy-nine percent of Generation Z "would rather have face-to-face interactions with professionals than carry out the process fully online."
- Eighty-one percent prefer using real estate professionals.
- They will more likely attend at least one open house.
- Nearly 65% of Generation Z reported that they are not confident in their financial knowledge of the mortgage process. Thus, 71% would consult with their parents, 58% would consult a real estate agent, 54% would search on the Internet, 45% would consult with family/friends, and 41% would consult mortgage lender or a bank.
- According to a report from Transunion, the number of Generation Z consumers with a mortgage rose by 112% from 2017 to 2018.
- Generation Z's home location preferences:
- In proximity to their work: 71%
- In proximity to friends and family: 52%
- Near or in an urban location: 25%
- Within proximity to shopping: 24%
- With access to nightlife: 12%
- Fifty-eight percent prefer living in a diverse community, "while 12 percent preferred residing in a homogeneous neighborhood."
- This preference is because 48% of Gen Z are members of ethnic minorities.