Generation Z Could Be the Biggest Generation of Home Buyers Yet
While homeownership has been shrinking in the U.S., a new generation of home buyers appears primed to reverse the trend. It would appear, for the time being, that the next generation is extremely bullish on the prospect of homeownership. So will generation Z be renters or buyers? How much do they really care about real estate as an investment, and what do their beliefs mean for today’s real estate investors and home owners?
Generation Z is expected to be incredibly active in the future real estate market. They are already forming ideas about their futures, goals, desired lifestyle and the real estate market. Their perspectives can be quite different to previous generations at their current age. Current real estate investors, companies and agents need to be alert to this, and account for Z’s impact, both domestically and internationally.
On a global level, rising incomes, increased mobility, and outsourcing could dramatically increase the percentage of international buyers in the USA. However, this could also be impacted depending on America’s ability to re-create a business friendly, entrepreneurial open society.
How Interested in Real Estate is Generation Z?
While a good portion of generation X has taken a breather from real estate, or is stalled due to recent foreclosures, many could come back if the right conditions are created. While gen Y was expected to shun real estate and stick to the renter lifestyle, many are not only embracing home buying, but are extremely bullish on starting in real estate as a career, and are launching real estate tech start-ups.
According to Donald Trump’s adviser, George Ross, the best time to invest in real estate is when you are young. The message doesn’t appear to have been lost on the next generation of home buyers according to new data from Inman News and Wakefield Research. The survey data shows 89% of generation Z respondents believe owning a home is a part of their American Dream, with 97% saying they expect to own a home. Of course, dreams are one thing, and what people are actually winning to do, sacrifice and prioritize can be quite different.
How important is Real Estate to Gen Z?
Wikipedia suggests that the term “Homeland Generation” was actually preferred over Generation Z, which might be telling in itself. The data from Wakefield Research goes into more detail and may surprise many. Highlights suggest that Gen Z are:
- 11% more driven to owning a home than finishing college
- More than twice as driven to own a home than running a business or owning a luxury car
- 87% more interested in homeownership than being rich or having enough money to support themselves
How far will they go to own homes of their own?
Survey respondents said they would give up the following for one year to buy a home:
- Buying video games (67%)
- Going out to eat (60%)
- Music downloads (56%)
- Buying new clothes (48%)
- Using cellphones (28%)
Apparently this generation has their priorities straightened out a lot more than some of their parents believe. So how does this generation plan to use the internet to fuel their home buying goals in the future?
- Viewing online home listings (85%)
- Virtual tours (71%)
- Video chats with real estate professionals (29%)
What Does the Data Mean for Today’s Real Estate Agents and Investors?
Before panicking, developing new plans, or diving into new marketing and buying strategies, it is important to first take stock of the markets real estate investors and agents are already working in. Know your area demographics and migration trends. Are you in an area like San Diego which is attracting many millennials? Or like parts of CT where almost 25% of the population is under 18? Or like Long Island where most of the younger generations are fleeing? What will the population’s age mix look like in 10 years from now? Is it time to get a head start on positioning to a new group, or time to invest in a new area?
It is also clear that Generation Z might need a good amount of real estate and financial education to prepare them for homeownership and qualifying to buy. Wanting to own a home is great. However, there could be significant challenges for many that fail to prioritize education, starting businesses and building up income and finances.
How will it impact today’s rental property investors? Will more leave renting to own? How can rental properties be used as a launched pad or funnel for capitalizing on the next round of home buyers? Can renters be groomed to move up to buying nearby homes? Could their performance be tracked and used to qualify them for great owner financing deals? Could rentals be converted to resale properties in this time period and be sold to existing tenants?