However, while many Millennials are often deterred from entering the housing market, evidence suggests that Generation Z has its eye on the prize, according to a PropertyShark report.
PropertyShark surveyed 2,134 U.S. renters, owners and people living with family to determine savings, home ownership, amenity and community preferences, as well as demographic data such as employment and marital status.
According to the company, although student debt is the number one obstacle for Gen Z and Millennial respondents, a whopping 83% of Gen Z has plans to purchase a home within the next five years.
This indicates that Gen Z is likely to pose a threat in the real estate market in upcoming years.
Aside from debt, Millennials who aspire to own a home have been locked into the rental market far longer than previous generations, severely affecting their hopes of saving enough cash for a down payment.
A report conducted by RentCafé found that Millennials are paying nearly 45% of their total income towards rent and setting aside about $92,000 towards rent before they turn 30.
PropertyShark discovered that the same number of Millennial and Gen Z respondents expect to pay more than $50,000 for a home down payment, which is about a third of both generations.
However, when compared to Gen Z, Millennials expect they’ll need to put $41,000 down on a home payment, which is about 10% more than Gen Z.
So, what exactly is driving Gen Z homeownership optimism? Well, technology and amenities.
Gen Z is dreaming big, ‘the Instagram Generation” wants large homes, and are less likely to compromise this desire when purchasing a home. While Millennials find extreme importance in location, Gen Z would sacrifice location and an easy commute for space and amenities, according to the report.
PropertyShark determined that entertainment options rank significantly higher than living close to friends or convenient outdoor spaces, and “the digital fluency” indicates that Gen Z prizes smart appliances and smart homes over their generational counterparts.
Although pressures of home purchasing are more prevalent for Millennials, and Gen Z has brighter optimism, in the next few years the housing market can expect more competition from young adults looking to have their own piece of the American Dream.