Generation Z, America’s next generation of young adults, aspires to be homeowners, but may have to rent, according to a new survey by Freddie Mac.
Respondents were divided into two groups: minors, ages 14-17 (708) and young adults, ages 18-23 (823). Respondents represented a diverse cross-section of the American population.
Gen Z, like the preceding generation of Millennials before them, would prefer to own their own home, not rent, but unlike Millennials surveyed at the same age, who said they believed they would become homeowners by age 33, Gen Z respondents estimated they would reach the same goal by age 30.
A near majority of Gen Z respondents (86%) said they want to own a home someday, while an even greater majority (89%) believe it is somewhat likely they will – particularly those whose families earned $50,000 or more and owned the home in which they lived.
The majority of Gen Z respondents see homeownership as something to be proud of (93%), a sign of success (86%), something that provides privacy (93%), and providing independence and control (88%), but see obstacles to attaining their goal of homeownership that include home prices (92%), saving for a down payment (82%), and an unstable job or job change (68%).
Those who plan to pay for college (54%) consider student debt a major obstacle to homeownership, too. Moreover, 33% expect to pursue a bachelor’s degree, and 30% expect to pursue a master’s degree or higher - a significant increase from Millennials, who are currently at 27% and 12%, respectively.
In terms of financial awareness, 65% of Gen Z respondents report that they are not confident in their knowledge of the mortgage process. To learn more, 71% of Gen Z respondents said they would consult a parent, 58% a real estate agent, 54% the Internet, 45% other family and/or friends, and 41% a bank or mortgage lender.
Although Gen Z grew up in a digital generation, a majority (79%) said that when they are ready to purchase their first home, they would rather have face-to-face interactions with professionals than carry out the process online.
“One of the biggest challenges Millennials face today is the lack of affordable starter homes,” said Sam Khater, Freddie Mac’s Chief Economist. “Given Gen Z’s desire for suburban medium-sized homes close to urban areas with amenities, demand for entry-level homes will intensify.”
From July 12-24, 2019, Freddie Mac contracted Ipsos to conduct an online survey of 1,531 American teenagers and young adults, ages 14-23 years old – members of the generational cohort known as “Generation Z (Gen Z).”