Gen Z sees homeownership as the key to building wealth.
Only 18% of Americans believe now is a good time to buy a home, even as consumers report improved job security and financial health, according to a new survey from Fannie Mae.1
While 82% think it’s a bad time to buy, 87% of Gen Zers (those born between 1997 and 2012) think it’s the key to building wealth, even those who feel the goal is out of reach for them, according to another survey from Arrived.2
KEY TAKEAWAYS
- 82% of Americans think this is a bad time to buy a home.
- 87% of Gen Z feel that homeownership is the key to building wealth.
- Home prices are the biggest barrier to entry into the housing market for nearly 80% of Gen Zers.
Gen Z Feels Shut Out
More than half (65%) of Gen Z respondents who want to buy a home cite financial security and stability as the top two reasons for wanting to own a home, according to a survey by the Seattle-based real estate investing platform Arrived. Soaring home prices make ownership seem like just a dream for most of this generation, with a 58.7% increase in home prices since 2014 when the oldest Gen Zers became adults.2
“Coming of age amid skyrocketing home prices and pandemic-era economic turbulence has given some of Gen Z financial whiplash, particularly when it comes to owning a home,” said Cameron Wu, VP of Investments at Arrived in a statement. “There’s this common perception that owning a home is just not something that young people can do.”
Prices and Inventory Are Barriers
Gen Z isn’t the only group who sees homeownership as an unattainable dream, with 82% of Americans overall citing high prices as a barrier.
“While consumers are reporting confidence in the components related to their personal financial situations, it’s unlikely we’ll see housing sentiment catch up to other broader economic confidence measures until there is meaningful improvement to home purchase affordability,” said Doug Duncan, Fannie Mae Senior Vice President, and Chief Economist in a statment.1
A lack of inventory is another key factor that may be preventing more people from purchasing a home.
While home inventories are improving modestly, they are still 51% below pre-pandemic levels, putting upward pressure on home prices despite efforts by the Fed to cool the market through higher rates. The number of homes on the market is down in 95% of major markets this year, with the largest swings occurring in Western locales like Phoenix; Boise, Idaho; Ogden, Utah; San Francisco; and Colorado Springs, Colorado.3
“The same lever used to reduce demand—that is, raising rates—has not only made housing unaffordable almost universally across major markets, it has also resulted in significant supply shortages by discouraging potential sellers unwilling to list in such an environment, further strengthening prices,” Black Knight Vice President of Enterprise Research Andy Walden said in a statement. “At this point, even if rates come down, but not so sharply as to entice potential sellers out of their sub-3.5% mortgages, it could risk a widespread reheating of home prices across the U.S.”.
Article Source
- Fanniemae.com. “National Housing Survey“
- PRNewswire. “Survey: 87% of Gen Z Believes Homeownership is Key to Building Wealth, Yet Many Feel Shut Out.”
- PRNewswire. “Black Knight: Housing Market Reignites as Home Prices Hit New Record High in May; Inventory, Affordability Continue to Plague Potential Buyers.”
https://www.investopedia.com/about-80-percent-think-it-s-a-bad-time-to-buy-a-home-7574282
