While about three-quarters of 18-to-25-year-olds who participated in a recent survey said they prefer homebuying over renting long-term, a lack of job security—for a generation relatively new to the workforce—could hinder plans, according to information gathered and analyzed by researchers at Realtor.com.
Among the 700 Generation Z respondents to the survey, about 64% said their COVID experience has not impacted their homeownership plans. In fact, the authors report that more than one-quarter of those surveyed feel even more strongly about buying a home as a result of the pandemic.
"Gen Z values homeownership. However, the oldest members of this generation are just entering the professional stage of life and not yet in a financial position to make a big play as first-time buyers—especially in the current housing market, which is challenging even older generations who have had many more years to save for a down payment," said George Ratiu, Senior Economist, Realtor.com. "With nearly three-quarters of those surveyed preferring to buy versus renting long-term, the housing industry should be prepared for millions of Gen Z buyers to bring a new wave of demand along a similar stage-of-life timeline as the millennial generation before them."
Among respondents who said they prefer buying versus renting long-term, 40% said now isn't the right time to buy because they don't know exactly what their future housing needs will be.
About 43% reported they would be ready in the next five years. And 44% said they expect to be entering the housing market within the next five to 10 years.
Almost half reported that they envision themselves living in suburban metros, 19% said they plan on buying in rural areas, while another one in three expects to buy within a major city center.
When asked what is preventing them from buying now, half said the No. 1 barrier is job stability. Bear in mind that a third of this demographic is still in their college years—yet some 43% are employed now, and 45% of respondents said they already are saving toward buying a home.
Realtor.com's Deputy Editor Rachel Stults says that affordability is key for this demographic and where they will choose to live.
"From exploring metros that offer both jobs and more affordable housing, to saving for a down payment, Gen Z homebuyers know how crucial it is to have a financial leg up when it comes time to buy," Stults said. "If they can learn anything from the experience of the generation before them, it's the importance of laying the groundwork so that they can act quickly on a home in their budget."
She adds that prospective buyers should also plan for any number of shake-ups that could occur in the aftermath of the coronavirus pandemic, for "what they'll do if mortgage rates increase or other housing market conditions change quickly."
"In short, whether they plan to buy in two years or 10 years," she said, "prospective Gen Z homeowners should be thinking several steps ahead."