Those born after 1996 are entering the years in which many Americans begin shopping for homes, and despite the economic turmoil created by COVID-19, this Generation Z is beginning to buy, according to a LendingTree study that examines the most popular destinations for Gen Z buyers, as well as other key homebuying behaviors.
"Gen Zers comprise just under 10% of potential homebuyers in any of the nation’s largest metros. But as the economy recovers and more of them reach adulthood, Gen Zers are poised to make an even greater mark on the housing market. While their overall impact on housing may be hard to predict, it’s clear that some Gen Zers are eager to join the ranks of homeowners sooner rather than later," LendingTree reported.
To determine where Gen Zers are seeking homes, researchers analyzed "mortgage purchase requests made across the nation’s 50 largest metros by people aged 18 to 23 on its online marketplace between Jan. 1-Oct. 1.
Here are the key things discovered in LendingTree's study:
- Salt Lake City, a metro with a population that tends to skew younger, and the relatively inexpensive Oklahoma City and Indianapolis are the metros where Gen Zers make up the largest percentage of purchase requests. In Salt Lake City, 8.47% of purchase requests came from Gen Zers. In Oklahoma City and Indianapolis, the share of Gen Z requests are 8.01% and 7.74%, respectively.
- In super-expensive areas like San Francisco, San Jose, Calif. and New York City, Gen Zers are making the smallest percentage of purchase requests. Gen Zers made just 2.19% of the purchase requests in San Francisco, 2.98% in San Jose, Calif. and 3.30% New York.
- Gen Zers in San Francisco, San Jose, Calif. and New York City also had the highest average credit scores in the nation. Because loan amounts in these metros are so high, lenders usually require borrowers to have higher credit scores to get approved. It is for that reason that the average combined credit score for these three areas is 703, which is 39 points higher than the average for all 50 of the nation’s largest metros, 664.
- Gen Zers in Birmingham, Ala., Memphis, Tenn. and Virginia Beach, Va., had the lowest average credit scores across the nation’s largest metros. Credit scores in these three areas were 641, 644 and 647 respectively.
- Nearly a quarter of Gen Zers surveyed by LendingTree reported receiving no down payment assistance when purchasing a home. While 86% of Gen Zers received help to come up with a down payment from at least one source, including their parents or their employer, 24% said that they came up with the funds without assistance.
For the detailed report and methodology, visit LendingTree.com.