Data reveals that although younger generations have concerns about factors like affordability, they still view homeownership as an important milestone.
The dream of homeownership remains an integral part of life for Gen Z and Millennials in the U.S., who continue to feel that owning a home is important despite having to navigate shifting market conditions to get there. A new consumer survey conducted by RE/MAX analyzed how these younger generations are viewing homeownership.
The survey included responses from 1,500 Gen Z and Millennial individuals (750 from each cohort) who plan to purchase a home in the next five years.
Over the past several years, the housing market has seen fluctuating inventory levels, home prices, and interest rates. As the survey reveals, market conditions are not causing all prospective buyers to reconsider their plans to purchase. In fact, 63% of Gen Z and Millennial respondents indicated they are interested, eager and ready to become homeowners, even though they have some concerns around housing prices, interest rates, etc.
Explore additional findings from the RE/MAX survey below:
Gen Z and Millennials are Eager to Become Homeowners
➜ Sixty-three percent of prospective homebuyers surveyed indicated they are interested, eager and ready to become homeowners
➜ Overall, respondents reported they expect to encounter the following obstacles when purchasing a home:
• Affording upfront costs (down payment, closing costs) (40%)
• Saving for a down payment (39%)
• Qualifying for a mortgage (credit score, debt, income challenges) (39%)
• High interest rates (36%)
• Difficulty finding the right property (based on wish lists and inventory levels) (36%)
• Competitive housing market (e.g., bidding wars) (24%)
➜ Homebuyers surveyed also noted concerns about owning a home, including:
• Maintenance and upkeep costs (50%)
• Property taxes (49%)
• Monthly mortgage payments (46%)
• Homeowners insurance (30%)
• Housing market fluctuations (24%)
➜ Nearly two-thirds (65%) of Gen Z first-time homebuyers noted they are eager to buy or interested in homeownership, but are most concerned about:
• Affording upfront costs – such as down payment and closing costs – when purchasing a home (40%)
• Property taxes when owning a home (48%)
➜ Fewer Millennial respondents (61%) than Gen Z (65%) are eager or interested in homeownership, but are most concerned about:
• Maintenance and upkeep costs when owning a home (54%)
• Qualifying for a mortgage – because of credit scores, debt and income challenges (42%)
➜ After purchasing their first home, prospective buyer’s future goals include purchasing a larger home (45%), investing in rental/vacation properties (34%), and building a custom home (33%)
Understanding and Financial Preparedness for Homebuying Process
➜ Sixty-five percent of respondents reported being fairly or very knowledge about the residential real estate market
• 61% Gen Z
• 67% Millennials
➜ More than half (56%) of respondents are confident in their understanding of key financial terms related to homeownership (interest rates, closing costs, escrow, etc.)
• 61% Gen Z
• 51% Millennials
➜ Fifty-six percent of respondents reported strong familiarity with the process of obtaining a mortgage
• 48% Gen Z
• 63% Millennials
➜ Over half of respondents (52%) are confident in their financial readiness to purchase a home
• 47% Gen Z
• 57% Millennials
➜ Thirty-eight percent reported they have already started saving for their down payment; 26% said they have not started saving but plan to start soon; 17% said they already have a down payment saved
• Thirty-five percentof Gen Z have started saving; 30% have not, but plan to start soon; 15% confirmed they already have a down payment saved
• Forty-two percent of Millennials have started saving; 22% have not started but plan to soon; 19% already have a down payment saved
➜ More than two-thirds of respondents (67%) agreed that it’s essential to have a 20% down payment when buying a home
• 64% Gen Z
• 71% Millennials
➜ Thirty-eight percent plan to finance their future home purchase with savings, while another 35% plan to use a mortgage
• Gen Z is more likely to use savings (42%) to finance their home purchase than a mortgage (29%)
• Millennials are more likely to finance a home purchase using a mortgage (41%) rather than savings (33%)
• Ten percent of respondents plan to finance their purchase with assistance from family
Homeownership Is Still an Important Milestone
➜ Respondents selected the following as their top reasons for pursuing homeownership:
• To provide a stable place for their family to live (66%)
• Have a place to call their own (59%)
• An opportunity to have an appreciating asset (44%)
➜ For both generations, the most important factors considered when buying a home are:
• Price (59%)
• Location (54%)
• Size (34%)
• Neighborhood safety (33%)
• Mortgage rates (24%)
➜ Fifty-six percent of respondents are willing to compromise on these important factors (e.g., price, location, size, etc.) to become homeowners:
• 57% Gen Z
• 56% Millennials
➜ More than one-third of respondents (34%) said eco-friendly/energy efficient features are most important to have in a home, over technology enabled features (27%) and outdoor/recreational amenities (25%)
Education and Guidance are Priorities
➜ Ninety percent of respondents noted they are somewhat or very likely to work with a real estate agent when buying or selling a home
➜ Buyers said they want their real estate agent to:
• Guide them through the process from start to finish (59%)
• Negotiate offers (50%)
• Educate them on the process (49%)
• Provide expertise on the market they are buying or selling in (42%)
• Expose them to properties they might not otherwise see (39%)
• Share their knowledge of the comparable properties in the market (33%)
➜ Thirty-five percent of respondents use real estate apps and websites regularly to search for properties
➜ Nearly two-thirds (63%) will use or consider using a real estate agent or mortgage lender to learn about the homebuying process (63%). The next most popular resources for learning about the homebuying process:
• Online resources (real estate website, news articles) (55%)
• Family and friends (44%)
• Homebuyer education course (27%)
• Books (19%)
• Podcasts (17%)
➜ Fifty-seven percent of respondents would consider taking a homebuyer education course, including 51% of Gen Z and 63% of Millennials. Thirteen percent confirmed they have already taken a homebuyer education course.
As buyers from any generation approach homeownership, they’ll want to leverage the expert guidance of a real estate professional. Connect with a local RE/MAX agent to help you navigate the homebuying process.
Survey Methodology: Data is based on a survey conducted in partnership with Pollfish and fielded May 21, 2024, among 750 Gen Z (ages 18-27) and 750 Millennials (ages 28-44) in the U.S., who plan to purchase their first home in the next 12 months.
Article originally appeared on RE/MAX.com.
