January 24, 2020 Comments Off on Gen Z Ready to Buy Homes, Competition Remains Fierce Views: 378 National News

Gen Z Ready to Buy Homes, Competition Remains Fierce

The oldest members of Gen Z are now 22 years old and beginning to enter the homebuying stage of their lives, but competition for entry-level homes remains fierce.

Gen Z currently makes up 2% of mortgages, according to the Fourth Quarter 2019 Generation Propensity Report, from realtor.com. The company predicts that number will continue to grow as the generation ages and their earning potential increases.

A recent survey conducted by realtor.com in 2018 found that 40% of Gen Z members would like to own their own home by the age of 25. As the oldest age group of Gen Z reaches that age, the company’s recent analysis shows they are steadily increasing their share of home purchases across the nation.

“Gen Z is entering the housing market under the radar, but at a projected 65-million strong, they are going to begin making some major waves,” said George Ratiu, senior economist at realtor.com. “However, as the young generation launches into homeownership, it is facing strong headwinds, including competition from millennials, many of whom are entering homeownership later in life, and a marketplace largely devoid of entry-level options.”

Generation Z is facing a multitude of headwinds as the group reaches prime home buying age. One of the strongest is a lack of homes prices under $200,000 being built or available for sale.

During the fourth quarter of 2019, the median purchase price of a home by Gen Z was $160,600, according to realtor.com. In December, the inventory of homes priced below $200,000 decreased by 18.1 percent year-over-year, according to realtor.com’s December Monthly Trends Report.

To find homes within their budget, Gen Z is turning toward smaller Midwestern and Southern markets with higher affordability. Toledo, OH; Grand Rapids, MI and Wichita, KS were the top three metros where Gen Z had the largest share of homeownership, according to realtor.com. Other popular cities for Gen Z homebuyers included Virginia Beach, VA; Winston-Salem, NC and Baton Rouge, LA.

The top 10 Gen Z markets had a combined median listing price of $224,500, which is 25% less than the nation’s median listing price of $300,000.

Another headwind for Gen Z buyer is competition with millennials.

The largest cohort of the millennial generation turns 30 in 2020, and they are heading to the housing market in droves. At the end of 2019, millennials made up the largest generational segment of homebuyers, growing their share of home purchase mortgages to 48%.

As Gen Z begins to enter the market in 2020 and beyond, they are facing stiff competition from millennials that waited to purchase a home due to the housing market crash of 2008 and the aftermath of that, as well as the much-documented burden of student loans.

For now, realtor.com reports that Gen Z and millennials have differing preferences on where to buy a home. Of the markets on Generation Z’s top 10 list, only Grand Rapids, MI, and Baton Rouge, LA, appeared on the top 10 list for millennials.

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