In 2023. The home ownership rate for adult Gen Zers, those 19
to 26 years old, was higher than the homeownership rate For millennials and Gen X when they were 24. The race is close though, 27.8% of 24 year old Gen
Zers are homeowners, Compared to 24.5% of millennials when they were the
same age. Gen X had a lower rate at 23.5%. I'm so happy with with buying a home, and in the
moment, I didn't know if I Was making the right call. Who knows the bad things that can happen if you really
don't make ends meet after you buy a home. But fortunately, I did get through it and I think I'm
in a way Better place now. Gen Z makes up only 3% of home buyers. This generation is entering homeownership with the
lowest income, and are unlikely to be married or have Children under 18, in their household. In 2023, almost three quarters of Gen Zers said they
planned to buy a home within six years, even though the Market is tough for buyers. It is an incredibly difficult housing market right now. We have very limited housing inventory, and we have
had very limited housing inventory for a long period Of time. It's pushed up home prices at the same time
that interest rates are at a higher point than They have been in the last few years. So how is Gen Z affording homes sooner than their
elders could? And what implications will that have for the housing
market and US economy? In January 2021, the 30 year fixed mortgage rate hit a
record low. I signed less than 3% on my mortgage, which is, you
know, an Astronomical low that's historic. So I probably will never give that up. I won't buy until either. I don't need a mortgage. I can make an equity transaction. Gen Z was looking like they were doing better than
millennials, better than Gen X, because they were Buying homes at a faster rate. But I think a lot of that had to do with how low
interest rates were during those years, and Remote work opening up more possibilities for Gen Zers
to buy homes in places that are more Affordable.
I had just turned 21 years old when I bought my home. Dominic purchased his first home in October 2020 for
about $200,000. He previously rented it while attending nearby
Stockton University. I did not want to pay over $1,200 a month to live on
campus, and I just didn't see the Value in in doing that. During that time with the mortgage rates, it was
cheaper for me to buy a home than it was to Live on campus. Most Gen Zers were making their purchases in the
Midwestern region. Areas like Lincoln, Nebraska, toledo, Ohio, South
Bend, Indiana, Tuscaloosa, Alabama. And Eugene Springfield, Oregon were popular with Gen Z
homebuyers. About 28% of homeowners in Lincoln, Nebraska are part
of generation Z. Gen Z may be moving there because the median property
value was nearly $200,000 in 2022, While the national average was around $500,000 that
same year. Gen Z also bought homes in places like Virginia Beach,
Virginia, Cincinnati, Ohio, Detroit, Michigan, St. Louis, Missouri, and Indianapolis,
Indiana. The typical home purchased by Gen Z in these areas
cost $255,000 or less in 2022. Gen Z buyers are purchasing at the lowest household
incomes of all home buyers out there, so they're making The most financial sacrifices, but they're also making
compromises on the home. So maybe the condition or the age of the home. When they were younger, millennials were more inclined
to live in urban areas. Cities like Boston, San Francisco, Seattle and
Washington, D.C., had a high share of 18 to 24 year old homebuyers in the mid 20 tens. But millennials faced the Great Recession when they
entered the housing market in the late 2000s. Because of those housing barriers, years, millennials
were more likely to stay in their parents home for a Longer time than previous generations. Gen Z has learned from millennials before them. They've learned about student loan debt. They're weighing their pros and cons when they go to
college, and they're being financially savvy when they Think about where they want to place their money and
what they want to do with it. And it seems to be housing. While some Gen Zers bought homes, there are more living
at home with their parents. 31% of Gen Z live in their parents home currently. Meanwhile, boomers those born between 1946 and 1964,
began buying homes
During the 1970s and early 1980s, when the 30 year
fixed mortgage spiked over 18%. During 1970, when the oldest boomer was 24. The majority of US homeowners in a two or more person
household under 25 lived in the southern region. In addition to the easy interest rate environment
housing advantage, some Gen Zers were able to get a Head start from their family members. More than 36% of Gen Z and millennials who plan to
purchase are expecting their family to help them with The down payment. I had my parents cosign on the mortgage because at that
age, you, Regardless of your credit, you pretty much have to
have a cosigner. And and I understand that not not everybody has that
opportunity. If a Gen Z member was in a good economic position, they
had a job or they had help from family to afford a Home, and they were able to buy a home, and they made
out really well, because home values went up Considerably from 2021 to where we are now. An average American home in the second quarter of 2024
cost a little over $501,000. In February 2020, homebuyers needed to earn just over
$40,000 in annual income to Qualify for a starter home. Today, a first time buyer needs to make around $76,000
to afford a typical starter home in the US. 2020 experienced new lows for mortgage rates. The 30 year fixed rate was just under 3%. The typical age of a first time buyer in 2023 was 35,
in new Jersey. The median age was 49. Similar to the average age, the median price of a home
in new Jersey grew. The median price of a home for sale in the state of new
Jersey right now exceeds $500,000, and that's up over $100,000 from where it was even two years ago. So what we're seeing is a market that is increasingly
constrained in terms of opportunity for first time Homebuyers and for homebuyers seeking to trade up in
houses because of the market compression that we're Observing, as well as the tremendous amount of demand. Our population is growing year over year, and the
number of buyers seeking to purchase homes at the Median and lower end of the market continue to climb. Melanie is a director at the new Jersey Housing and
Mortgage Finance Agency. She and her team help first time homebuyers who are
trying to find homes but can't afford the additional Cost to jumpstart their process. Just 14 states, including new Jersey and one US
territory, offer homeowner assistance funding. The others have either suspended their programs or are
awaiting waitlist applications.
Across the state. As much as a quarter of families are now coming in
with a substantial down payment, often supported by Parents, loved ones, significant others that are not
necessarily co-borrowers. When the market is this tight, any kind of a cash
infusion can help you to access a home, and so that Pressure is increasingly making it difficult for first
time homebuyers who aren't selling a house and taking That nest egg to buy the next house. Over three quarters of Gen Z homebuyers have received
help on down payments. We're very conscious about trying to find ways to help
first time homebuyers invest and become homeowners, Homeowners while those houses are on the market, so
that they can really enjoy that opportunity themselves. And so that we see that direct investment. When you live on a street, you care about the
sidewalk, you care about the schools, you care about The lighting. So we view it not just as helping that
individual, but as helping that community. Along with the generational trends in home buying,
experts are also seeing a change in who is living Inside their homes. Gen Z as home buyers, they're more likely to be single
than they are to be partnered. So they're doing this actually on their own, which is
really interesting, when we think about affordability Conditions, half of them are single as they go into
home buying. We also know they plan on holding their home for a
longer period of time than we saw for young millennial Buyers at the same age. Like Gen Z, millennials are also more likely to move in
alone. 42% of millennial home buyers have purchased their
homes alone. Only 34% of Gen X are independent home buyers. Experts say. This trend speaks to how the younger
generations are delaying or forgoing marriage Altogether. But those who are interested in purchasing
alone could have a harder time qualifying for a Mortgage. Mortgage lenders look at annual salaries to
determine how much a potential client can afford to Borrow. This could potentially affect Gen Z because
they are most likely receiving entry level salaries. They owe a substantial amount of debt compared to
their parents when they are the same age and they're Grappling with the high cost of living from inflation. Gen Z homebuyers have comparatively lower incomes
compared to other homebuyers because they are Just starting out in their careers. So they're competing against Gen X and millennial home
buyers who've been in the marketplace longer and who Were closed out in the last decade from home
purchases. Roughly 38% of Gen Zers and millennials believe they
have a harder time building financial wealth than their Parents did because they feel left behind by the
economy, while 17% believe they have it easier.
And in some ways, Gen Z may be right. Although Gen Z is in fact making more money than their
parents did at the same age, they've racked up more Debt than their parents. An 18 to 24 year old in 2022 made $20,000 in wages
after adjusting for Inflation. That's nearly $5,000 more than what 18 to
24 year olds made in 1992. Yet, Gen Z carries more student loans and mortgage
debt than their parents. The average 18 to 24 year old in 2022 held $117,000 in
mortgage Debt, while the same age group in 1992 owed $39,367. For every $10,000 that you see an increase in someone's
student loans that basically reduces their ability to Purchase a home by 10 or 15%. Gen Z homebuyers have comparatively lower incomes
compared to other home buyers because they are Just starting out in their careers. When it comes to the workforce. Job security is a major obstacle for this age group,
and while young adults are more likely to be employed Full time than young adults, three decades ago, those
18 to 24 only saw a 1% gain in their Share of full time workers, compared to the same age
group that worked full time in 1993. It wasn't easy, I worked. I worked at least 40 hours a
week during college just to make it happen. These financial obstacles are impacting Gen Z and
driving a wedge between their goal to be homeowners. In 2023, after mortgage rates soared to as much as 8%,
the home ownership rate for adult Gen Zers stagnated.
