The housing market might still be reeling from Millennials’ delay in buying homes, but Gen Z – the generation after Millennials – is already setting their sights on homeownership.
According to a recent report by Realtor.com, Gen Zers are expected to start buying homes within five to 10 years.
How is Gen Z different from Millennials?
Gen Z is different from Millennials in many ways, and that’s going to influence their home buying preferences. With the oldest recently graduating college, Gen Z is shaping up to be a financially savvy and risk-averse generation. They’ve seen their Millennial predecessors dig themselves deep into student loan debt, so they’re choosing less expensive colleges and more practical career paths. In fact, more than a tenth of Gen Z are already saving for retirement.
Unlike generations before them, Gen Z’s home buying preferences are very different. They are looking for smaller, more affordable starter homes. And as U.S. birthrates continue to fall, researchers believe that members of Gen Z will continue the trend of having smaller families.
“They’re not going to stretch to buy a house they can’t afford, because that goes against everything they’ve done up until this point,” said Jason Dorsey, president of The Center for Generational Kinetics. “They’re going to be very worried about buying a home that might go down in value.”
“They’re going to want the most efficient use of their money,” added Dorsey, “So we think a smaller home closer to everything they want will be key.”
What are the key influencers?
Realtors cannot underestimate how big a part social media will play in Gen Z’s home buying experience. Not only will Gen Z do research on social media to see what it’s like to live in certain cities or neighborhoods, they may even prefer to tour homes using virtual reality rather than inspecting properties in person.
In addition, Gen Z is more likely to have a higher expectation for technology to be integrated in the home itself. Gen Z buyers are going to want homes to function as one, unified system, rather than a separate sprinkler, heating and cooling, and entertainment systems. This is important for today’s homeowners to note. As they prepare to put their homes on the market over the next few years, they may want to consider incorporating technology when making upgrades.
“What we consider a smart home today, that’s going to be old news to Generation Z,” said Dorsey.
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